NAT L INST. OF

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STAND & TECH

I I I 1 Iv:, PUBLICATIONS ' 635 r r

CED TECHNOLOGY PROGRAM

Performance of•

50 Completed

ATP Projects

STATUS REPORT - NUMBER 2

NIST SP 950-2

Nisr

NIST CENTENNIAL

National Institute of Standards and Technology

Technology Administration, U.S. Department of Commerce

Gaithersburg, Maryland

ADKANCEO TBeHNOLOGV PKOeKAU

Performance of

50 Completed

ATP Projects

STATUS REPORT - NUMBER 2

NiST SP 950-2

U.S. DEPARTMENT OF COMMERCE

Donald L. Evans, Secretary

TECHNOLOGY ADMINISTRATION

Phillip J. Bond, Under Secretary for Technology

NATIONAL INSTITUTE OF STANDARDS

AND TECHNOLOGY

Arden L. Bement, Jr., Director

Nisr

National Institute of Standards and Technology

Technology Administration, U.S. Department of Commerce

Gcithersburg, Maryland
NATIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY

Advanced Technology Program, Economic Assessment Office

NIST Special Publication 950-2

U.S. Government Printing Office

Washington, D.C.

December 2001

Book design and graphics by Linda S. Sherman Design, Inc., Montgomery Village, Maryland

ii
Table of Contents

ACKNOWLEDGMENTS v EXECUTIVE SUMMARY vii INTRODUCTION xiii

CHAPTER 1: OVERVIEW OF COMPLETED PROJECTS 1

Part 1: Project Characteristics 3

Part 2: Gains in Technical Knowledge 7

Part 3: Dissemination of Knowledge 9

Part 4: Commercialization of the New Technology 17

Part 5: Overall Project Performance ; 19

CHAPTER 2: ADVANCED MATERIALS AND CHEMICALS 27

AUiedSignal Inc 29

BioTraces, Inc. 33

Geltech Incorporated 37

IBM Corporation 41

IBM Corporation 45

Michigan Molecular Institute (MMI) 49

Westinghouse and SOS Tool 53

CHAPTER 3: BIOTECHNOLOGY 57

Aastrom Biosciences, Inc. 59

Amersham Pharmacia Biotech (formerly U.S. Biochemical Corporation) 65

Aphios Corporation (formerly BioEng, Inc.) 71

Integra LifeSciences 73

Molecular Simulations, Inc. (formerly Biosym Technologies, Inc.) 77

Thermo Trilogy Corporation (original awardee: AgriDyne Technologies, Inc.) 81

Tissue Engineering, Inc. (TE) 85

CHAPTER 4: ELECTRONICS/COMPUTER HARDWARE/COMMUNICATIONS 89

Accuwave Corporation 91

American Display Consortium 95

AstroPower, Inc • 101

Calimetrics, Inc 107

Cree Research, Inc Ill

Cynosure, Inc 115

Diamond Semiconductor Group, LLC (DSG) 119

ETOM Technologies, Inc. (formerly Optex Communications, Inc.) 123

FSI International, Inc 127

Hampshire Instruments, Inc. (Joint Venture) 131

iii
Light Age, Inc 133

Lucent Technologies Inc. (formerly AT&T) 137

Multi-Film Venture (Joint Venture, formerly the American Scaled-Electronics Corporation) 141

National Center for Manufacturing Sciences (NCMS) 145

NetOptix Corp. (formerly Galileo Corporation) 151

Nonvolatile Electronics, Inc. (NVE) 155

Spire Corporation 159

Thomas Electronics, Inc 163

Vitesse Semiconductor Corporation 167

CHAPTER 5: INFORMATION TECHNOLOGY 171

Communication Intelligence Corporation (CIC) 173

Communication Intelligence Corporation (CIC) 177

Engineering Animation, Inc. (EAI) 181

Mathematical Technologies Inc. (MTI) 187

Torrent Systems, Inc. (formerly Applied Parallel Technologies, Inc.) 191

Union Switch and Signal, Inc 195

CHAPTER 6: MANUFACTURING 199

American Superconductor Corporation (ASC) 201

Armstrong World Industries, Inc 207

Auto Body Consortium (Joint Venture, formerly 2mm Auto Body Consortium) 211

E.I. du Pont de Nemours and Company 215

HelpMate Robotics, Inc. (formerly Transitions Research Corporation) 219

Illinois Superconductor Corporation (ISC) 223

Microelectronics Center of North Carolina (MCNC) 227

Perceptron, Inc 233

PreAmp Consortium (Joint Venture) 237

Sage and 3M Corporation 241

Saginaw Machine Systems, Inc 247

CHAPTER 7: APPENDICES 251

Appendix A: Development of New Knowledge and Early Commercial Products and Processes 253

Appendix B: Terminated Projects 259

Appendix C: Project Performance Rating System Status Reports - First 50 Completed Projects 267

iv
Acknowledgments

_*.irst, and foremost, the contributors to this report acknowledge the many researchers at companies, universities, and other institutions who achieved the technical progress related in this report,

and the managers and investors who supported and directed the work. Without their visionary

insight, creativity, hard work, and commitment to the innovation process, there would be little

to discuss here.

Second, the contributors acknowledge the assistance provided by ATP program managers who

assisted the case writers in understanding the projects and the technologies. They provided an

invaluable link to the projects and research community.

Finally, the project manager, Darin Boville, acknowledges the collective and individual contributions to this report by the senior author and case writers. Appreciation is extended to Rosalie

Ruegg of TIA Consulting, in her role as senior author, for compiling and analyzing aggregate

statistics, developing composite performance metrics for all the projects, preparing the overview

chapter and appendices, editing the new cases, and helping to redesign the report and adding new

features. Kathleen McTigue, the project coordinator, oversaw the entire publication effort, reviewed

various drafts, and provided editorial and stylistic input. William Long of Business Performance

Associates, the author of the first published status report containing 38 cases which were rolled

into this volume, is due thanks. Chris Hansen, Benjamin Fletcher, Kathleen McTigue, Josh

Rosenberg, Karen Seeh, Mariah Tanner, Jonathan Tucker, and Michael Walsh — all present or former members of ATP's staff — are deserving of credit for adding a dozen new cases to the

report. Linda Sherman and her staff at Linda Sherman Design, Inc., are thanked for their work on

the design and layout. ATP and NIST staff who reviewed the draft report are also acknowledged,

particularly Stephanie Shipp, Director of the Economic Assessment Office, Jeanne Powell, and

Connie Chang.

Finally, appreciation is extended to the reader who takes the time to learn more about the projects

and the program. This report is one of several resulting from ATP's ongoing evaluation effort to provide information to the public on the projects it has funded. Other studies are available at ATP's website (www.atp.nist.gov). We welcome your questions and comments.

Darin Boville

Project Manager

Economic Assessment Office

ACKNOWLEDGMENTS

Executive Summary

jL wJLore efficient use of energy, more efficient medical treatments that cost less and cause less pain, the

capacity to process growing volumes of data, better vehicles, and improved position in the highly competitive

international electronics market—these are among the many significant achievements of projects supported by

the Advanced Technology Program (ATP) over its first decade. Results from the first 50 completed projects are

strong for ATP, with estimated benefits far outweighing the entire cost of ATP to date.

The First 50 Projects

Policymakers, program administrators, business managers,

and others in this country and abroad have eagerly awaited

a comprehensive look at results from ATP-funded research

projects. This report provides at least partial answers by

assessing the first 50 completed projects—approximately

10 percent of the projects funded by the ATP from 1990

through 2000. The performance metrics show how each

of the 50 projects performed in terms of new technical

knowledge created and disseminated, direct commercialization of new technologies, and overall project effectiveness.

Project Characteristics

The majority of the first 50 completed projects are singleapplicant projects led by small businesses. Although only

16 percent are joint ventures, 84 percent involved collaborative relationships. Nearly half had close R&D ties with

universities, and more than half formed collaborative

arrangements with others to pursue commercialization.

ATP's designated technology area Electronicsl Computer

HardwarelCommunications comprised the largest group

of projects, followed by Manufacturing, Biotechnology and

Advanced MaterialslChemicals, and, last, Infonnation

Technology.

The ATP spent an average of $1.5 million per singleapplicant project and an average of $4.9 million per jointventure project. Across the 50 projects, the average total

cost (ATP plus industry) per project was $4.2 million, and

the median project length was three years. Together, ATP

and industry spent a total of $208 million on the 50 projects,

with ATP and industry sharing total research costs roughly equally.

ATP's IVIission and Operations

The National Institute of Standards and Technology

(NIST), a part of the Department of Commerce's

Technology Administration, administers ATP. The ATP

and industry share research costs for projects characterized

by ambitious scientific and technological goals, and by a strong potential to improve the competitiveness of U.S.

businesses and offer substantial economic return to the

United States. The ATP seeks to accelerate the development and application of enabling technologies whose

benefits will extend well beyond the direct benefits to the ATP award recipients. The focus is on collaborative,

multidisciplinary research and on civilian technologies

that appear likely to be commercialized in the marketplace

with private sector funding once the high technical risks

are reduced. The projects funded are selected in rigorous

competitions on the basis of their technical and economic

merit, as determined by peer review.

Since 1990, ATP has committed funding of $1.6 billion

in research costs for 522 projects, with companies contributing a similar amount in matching funds for the research,

and much more in the post-project periods for follow-on

commercialization. More than 1,000 companies, universities, and nonprofit laboratories lead the projects or participate as members of research joint ventures. More than

1,000 additional organizations are involved as subcontractors and informal collaborators.

EXECUTIVE SUMMARY vii
study Scope, Approach, and Organization

This report comprises one element of ATP's evaluation

program, providing a systematic and comprehensive look

at a large group of ATP projects, and shedding light on the

performance of the program at large.

At the report's core are 50 mini-case studies covering

the first-completed projects and investigating the perform- ance of the projects several years after completion.

Chapter 1, an overviev*^, provides aggregate descriptive

statistics, and then presents aggregate output statistics

first, for knowledge creation/dissemination, and, second,

for progress toward commercial goals. It then uses all of

the outputs to construct a composite performance score to

indicate overall project effectiveness. The result is a fourstar system of ratings, with scores ranging from zero to four stars. For a group of top-rated, four-star projects, the chapter

examines estimates of partial net benefits and considers

their implications for the overall success of ATP to date.

It also provides summary examples of strong three-star

projects.

Because technology development and commercialization take time and are characterized by unexpected breakthroughs and failures, future updates of these projects may

alter the findings reported here.

Overall Project Performance

As expected with projects that tackle difficult research

problems, not all of the projects are equally successful.

Sixteen percent of the projects are top-rated in terms of

overall project performance. Twenty-four percent are in

the bottom group in terms of project performance. Sixty

percent make up the middle group.

The top performing projects not only solved challenging and significant technical problems, but also made the

new technical knowledge available to others, and directly

used that knowledge to accelerate commercial use of the

technology—three dimensions of performance that figure

prominently in achieving the long-run success of the ATP.

Among this group, half of the top performing projects

received awards for their technical accomplishments from

outside organizations, and more than half of the singlecompany project leaders received outside recognition for

their business accomplishments. All of the top-rated projects forged collaborative relationships, and all attracted private capital for their follow-on commercialization efforts. Among the single-company projects in the group, all the

companies expanded their employment substantially. All

had a very strong outlook for continued progress, and, in

fact, have continued to make strong progress.

The lowest scoring projects were not without accomplishments. Most performed research and produced

patents or technical publications, or gave presentations.

But none won awards or showed sustained direct progress

toward commercialization, and the outlook for direct commercial action of the award recipients was poor or uncertain at best.

The large mid-scoring group of projects had solid

and, in some cases, outstanding— technical accomplishments, and, in some cases, made substantial progress

toward commercialization. In other cases, the projects were strong technically, but showed little follow-on commercial progress. In a few cases, the projects produced a technology with commercial strength but did little to disseminate knowledge to others—a public-interest goal of

the program. In yet other cases, there was moderate

progress in creating and disseminating knowledge and

moderate progress toward commercial goals. This middle

group, although not featured in the discussion of net benefits in this report, will likely yield substantial net benefits

overall.

From a portfolio perspective, the results look strong

for ATP: the estimated net benefits attributed to the program from the top-performing projects alone far exceed

the entire cost of ATP to date, suggesting that the program

is on track to produce a high return for the nation.

In addition, there is evidence that the benefits are extending well beyond those enjoyed by the award recipients. For example, when patients receive superior medical treatments at lower cost, there are spillover benefits.

When consumers buy high quality products and do not

pay the full value for the additional benefits they receive,

there are spillover benefits. When other companies

increase their productivity or value added by using ATPfunded technologies, there are spillover benefits. When

others acquire and use productively the knowledge from

project findings, there are spillover benefits. Several

examples illustrate technology developments and commercial progress of this first group of projects. (See box)

Peer Recognition of Technical Achievements

The knowledge created by each project is the source of

its future economic benefit, both for the innovator and for

others who acquire the knowledge. Knowledge created

by the 50 projects ranges from mathematical algorithms

underlying new software tools, to the science of growing

human tissue, to new techniques for fabricating high-temperature superconducting devices. Recognition of technical achievements by outside organizations, including trade

associations, foundations, and technical journals, indicates

viii EXECUTIVE SUMMARY
The National Center of Manufacturing Sciences (NCIVIS) Ann Arbor, Michigan, led a joint venture to achieve dramatic

technical advances in manufacturing printed wiring boards (PWBs). As a foundational component to any larger electronics assembly, PWBs are essential to many other technologies, and are used in the manufacture of products ranging

from computers to toys to vehicles. And, advances in PWBs improve the position of U.S. companies in the very competitive world electronics market.

The research team made advances in materials, soldering, imaging, and chemical processes. A new single-ply

fiberglass PWB, which allows substantial cost savings, has become the industry standard. New process methods

increase dramatically the yield of boards without flaws. A new surface finish protects the board in multiple soldering

applications. A new process for attaching thin copper plating to fiberglass reduces processing time and materials

cost. A novel interconnect structure has the potential to revolutionize the fabrication of PWBs by enabling much higher

wiring density. And, according to an in-depth economic study, because the research effort was collaborative, the new

capabilities were developed at a research cost-savings of at least $35.5 million. The various joint-venture participants and their licensees have successfully commercialized component technologies

arising from the project, resulting in substantial productivity improvements. Award-winning papers, patents, and new

process technology helped convey the information to the hundreds of small companies that make up most of the industry.

The president of NCMS credited the project with literally saving what was then the $7 billion U.S. PWB industry—a key

segment of a $20 billion domestic electronic interconnection industry employing over 200,000 people.

Engineering Animation, Inc., Ames, Iowa, developed core algorithms that enabled the creation of three-dimensional

images from sets of two-dimensional cross-sectional images of human body parts, and animation for selected organs.

After an initial failure to commercialize a high-cost system that incorporated the technology, the company adapted the

technology for CD-ROMs and print publications in 1995, and then bundled it with medical books. The company went on

to leverage its ATP-funded technology in a multiplicity of applications featuring three-dimensional animations which utilize computer visualization and computational dynamics—in sectors as diverse as medical education, entertainment, manufacturing design, transportation, and investigation of the Oklahoma City bombing.

Founded by two professors and two graduate students in 1990, the company had 20 employees at the time of its ATP award. Now its employees number approximately 1,000, and 1999 sales totaled $71 million. The company start- ed receiving recognition from other organizations for its technical progress in 1994, while it was working on the ATP project, it also has received extensive recognition for its business achievements, including acknowledgments by Individual

Investor, Business Week, and Forbes ASAP magazines as one of the best technology companies in the country.

Aastrom Biosciences, Inc., Ann Arbor, Ml, received an ATP award to develop a process for growing stem cells outside

of the body in 1990, when this was a new concept. Aastrom designed, constructed, and validated a desktop-size

bioreactor with the capacity to produce large amounts of stem and other cells from small amounts of bone marrow

and umbilical cord blood.

The journey from university research to commercializing its AastromReplicaliTM System has been a long path for Aastrom—one that is still underway, despite unabated effort and strong progress. The company has extended the

time for its expected commercialization date several times.

An earlier in-depth economic study estimated that the replication system, once implemented, would save approximately $134 million (in 1997 dollars) in the costs of providing bone-marrow transplants for cancer treatment, compared

to the best alternative technique. The study conservatively attributed about $47 million of the cost savings to ATP. The study also identified potential benefits of pain reduction and better patient outcomes from the technology but

did not quantify them.

Results from recent clinical trials point to an additional benefit—enabling cancer patients without donors to receive

stem cell transplants. Aastrom's replication system can expand tiny amounts of matching cord blood into sufficient

quantities for adult transplantation. According to the director of medical oncology at Hackensack University Medical

Center, "these results suggest that we may have found a new treatment approach that will enable more patients to receive treatment for this very serious and often fatal disease." According to the American Cancer Society, 30,000 new cases of leukemia are expected in 2000 and approximately 20,000 people will die from the disease this year, making new, more effective treatments of great value to society.

jHiiiiiii^^

EXECUTIVE SUMMARY iX
that others see considerable value in the projects. In

1996 alone, the projects claimed the following awards:

R&D magazine-an R&D 100 award to American

Superconductor, Inc., in Westborough, Massachusetts,

for its development of CryoSaver current leads;

Industry Week magazine-one of 25 Technology of the Year

Awards to American Superconductor, Inc., for applications of superconducting wire;

Industry Week magazine-one of 25 Technology of the Year

Awards to Engineering Animation, Inc., 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, Inc., in Danbury,

Connecticut, for the HelpMateRobot used in hospitals;

Microwave & RF magazine-one of the Top Products of

1996 to Illinois Superconductor, Inc., in Mt. Prospect,

Illinois, for cellular phone site filters and superconducting

ceramics;

Computerworld magazine-finalist for the Smithsonian

Innovator Medal to Molecular Simulations, Inc., in

San Diego, California, for advances in software to help

scientists simulate and visualize complex molecules.

Dissemination of New Technical Knowledge

Dissemination of the new knowledge provides spillover

benefits to other companies who, in turn, may use the

knowledge to increase and broaden the national benefits

from the ATP investment. Dissemination takes place in

several ways. Patents, publications, and presentations provide a convenient avenue for others to acquire the knowledge. All but 1 of the 50 projects produced one or more

of these outputs.

The extensive collaborative activities of the projects

have provided another avenue for the spread of knowledge. Eighty-four percent of these projects entailed

collaborations, including other companies, universities,

national laboratories, nonprofit consortia, and other organizations and individuals.

Release of new products to the market also disseminates new technical knowledge. Others can use the products and they may also attempt to discover how the products work by observation, testing, and reverse engineering.

More than 60 percent of the projects placed commercial

products or processes in the marketplace, providing others

with the ability to collect information about the new

technologies.

Workshops, websites, and evaluation studies also facilitate information flows. The ATP has organized and sponsored numerous public workshops over the years, in which

the companies have presented nonconfidential aspects of

their ATP-funded research and engaged in open discussions. The ATP has also made project information available on its website (<www.atp.nist>). Evaluation reports,

such as this one, are an additional source of information

for the public.

Commercial Progress in Applying the

New Technologies

If the new knowledge is to yield economic benefits to the nation, the award recipients, their collaborators, or the

companies who acquire that knowledge must put it to use. A second focus of the study, therefore, is on the commercialization progress of the award recipients, and in some

cases their direct collaborators. The study does not include

commercialization activities of companies who acquire

project knowledge indirectly, although these activities may

be as important or more important than those of the award

recipients and their collaborators.

Sixty-six percent of the 50 projects had one or more

products or processes in the market when they were

assessed, and another 14 percent expected to shortly.

Thus, despite the difficulty of moving from the research

stage to commercialization, companies in 80 percent of the

projects either sold product, or used or licensed to others

process improvements stemming from their research, or they were about to do so at the time they were contacted

by study analysts. Whether or not widespread diffusion of

a technology results from these commercial activities, it is highly significant that products and processes are actually on the market.

An indicator that a small research-oriented company is on the path toward commercialization is company growth.

A recent look at Fortune's "Fastest Growing 100 Companies" list found 2 of the 31 then-small ATP-funded

companies on the list.

Capitalized value of some of the ATP-funded companies has increased by hundreds of millions of dollars.

Nearly a fifth grew in employment by more than 500

percent from the beginning of the project to several years

after the project had completed, and 61 percent grew in

employment by more than 100 percent. Several of the

companies that were small when they received the ATP

award have grown out of that size category. Nineteen of

the 31 small companies at least doubled in size; 4 companies grew more than 1,000 percent.

Not all the small companies grew—a little more than

one-fifth experienced no change or decreases in staff and

not all kept their momentum going beyond the period of

ATP funding. But, as a group, the small companies fundX EXECUTIVE SUMMARY
ed by ATP grew rapidly as they parlayed their new

technical capabilities into business opportunities.

The study results point up the importance of the

ATP's two-path approach to realizing national benefits.

First, the direct commercialization effort by the award

recipient provides a path for the accelerated use of the

technology by U.S. companies. Second, the knowledge

created by a project may disseminate to others who may

use it for economic benefit whether the award recipients

do or not. One path may provide an avenue for benefits

when the other does not, and both paths may yield larger,

accelerated benefits compared to having only a single

route to impact.

What Difference Did ATP Make?

The focus of evaluation is not just on the performance

of projects, but on the difference ATP made to the out- comes. The results of the more detailed studies cited

here emphasize effects attributed to ATP. In addition,

the mini-cases attempt to establish retrospectively the

impact that the ATP had on project outcomes.

For 44 of the 50 projects responding to the question

of what difference ATP made, 59 percent would not have

been undertaken at all without ATP funding, and 41 percent would have begun at a later date or proceeded at a slower pace. (Personnel changes, severe company financial

distress, or lack of clarity in responses to interview questions made it impossible to include 6 of the 50 projects

in this tabulation.)

Other effects attributed to the ATP by the leaders

of these projects include the fostering of collaborative

arrangements for research and commercialization activities

and the ability to raise additional capital.

Examples of company comments about the role of the

ATP include:

Torrent Systems, Inc.—It is doubtful that the technology could have been successfully developed at all; venture

capital funding had been sought but was unavailable.

AlliedSignal, Inc.—The company would have needed

another five years to reach this stage of development.

Diamond Semiconductor Group, LLC—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.

Integra LifeSciences Corporation—Without ATP I don't know that we could have proceeded. We would be

at least five years or more behind where we are.

Nonvolatile Electronics, Inc.—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, Inc.—The award enabled FSI to

collaborate with Massachusetts Institute of Technology

researchers.

Light Age, Inc.—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, Inc.—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.

EXECUTIVE SUMMARY

Introduction

.ore than 7,000 U.S. businesses, singly and in Joint ventures, tiave proposed over 4,500 projects to the

Advanced Technology Program (ATP) since 1990, requesting nearly $10 billion in research funding. Approximately

12 percent of the proposals have been selected by the ATP for funding, for a total of 522 funded projects with

1,162 participants and approximately an equal number of subcontractors, through 2000. A growing number of the

multiyear projects funded are now completed or nearing completion. This study focuses on the first 50 completed

projects, and, to a lesser extent, on 16 projects terminated prior to completion during the same period.

ATP: A Partnership with Industry

The ATP attracts challenging, visionary projects with the

potential to develop the technological foundations of new

and improved products, processes, and even industries.

The ATP partners with industry on this research, fostering

collaborative efforts and sharing costs to bring down high

technical risks and accelerate technology development

and application. These are projects that industry in many

cases will not undertake without ATP support, or will not

develop in a timely manner when timing is critical in the

highly competitive global market. The program funds only

research, not product development. The ATP is managed

by the National Institute of Standards and Technology, an agency of the Commerce Department's Technology

Administration.

ATP awards are made on the basis of a rigorous competitive review which considers the scientific and technical merit of each proposal and its potential benefits to the

U.S. economy. The ATP issues a proposal preparation kit

that presents and explains the selection criteria to prospective applicants and provides guidance on preparing proposals.'

U.S. businesses conceive, plan, propose, and lead the projects. Government scientists and engineers who are expert

in the relevant technology fields review all proposals for

their technical merit. Business, industry, and economic

experts review the proposals to judge their potential to

deliver broadly based economic benefits to the nation —

including large benefits extending beyond the innovator

(the award recipient).

The ATP delivers benefits to the nation along two

pathways: 1) a direct path by which the U.S. award recipient or innovator directly pursues commercialization of the

newly developed technologies; and 2) an indirect path

which relies on knowledge transfer from the innovator to

others who in turn may use the knowledge for economic

benefit. Either path may yield spillover benefits. The

ATP looks to the direct path as a way to accelerate application of the technology by U.S. businesses. It looks to

the indirect path as a means of achieving additional benefits,

or benefits even if the award recipient fails to continue.

The ATP's two-path approach to realizing national benefits offers advantages: one path may provide an avenue for

benefits when the other does not, and both paths together

may yield larger, accelerated benefits as compared to having

a single route to impact.

Project Evaluation

The ATP, like other federal programs, is required by law

to report on its performance.' The ATP established its

evaluation program soon after it began, even before evaluation was widely required by Congress. The Economic

Assessment Office (EAO) of ATP plans and coordinates

' The current edition of the kit and other program materials may be obtained on ATP's website (<www.atp.nist.gov>), by e-mail (atp@nist.gov), by

phone (1-800-ATP-Fund or 1-800-287-3863), or by mail (ATP, NIST, 100 Bureau Drive, Stop 4701, Gaithersburg, MD 20899-4701).

INTRODUCTION X\\\
the evaluation of funded projects. It is assisted in this

effort by leading university and consulting economists

and others experienced in evaluation.

Performance is measured against the program's legislated mission. Emphasis is placed on attempting to measure

benefits that accrue not only to the direct award recipients,

but also to a broader population, i.e., spillover benefits.

This emphasis reflects the fact the public funding covers

part of the costs of these projects, and, therefore, a relevant question is how the broader public benefits from

the expenditure.

This report comprises one element of the EAO's

multi-element evaluation plan. The purpose of this report

is to provide an interim assessment of the status of ATPfunded projects several years after they are completed.

Although the ultimate success of the ATP depends on the

long-run impacts of the entire portfolio of ATP projects,

the performance-to-date of this partial portfolio of 50 projects provides partial answers. This study addresses the

question of what the public investment of $104 million in

the 50 projects has produced several years after completion of the research and what the outlook is for continued

progress.

It utilizes another element of the ATP's larger evaluation program: detailed economic case studies of selected

projects. It draws from these more in-depth case studies,

where they exist, to amplify the actual and prospective

economic impacts of the completed projects. Other evaluation activities of the ATP include database development

(i.e., a tracking of project developments through the life of

the project and into the post-project period); surveys; statistical and econometric studies; model development; and

special issue studies.'

Study Approach

From the moment that ATP funded its first group of 11

projects in the 1990 competition, program administrators,

the administration. Congress, technology policymakers,

industry, and others in this country and abroad were keenly interested in the outcome. But technology development and commercialization are lengthy processes, and it

takes time to produce results.

Now, as the program completes its first decade of

operation, there are a growing number of projects that

have completed their ATP-funded research and moved

into the post-project period. This group of 50 projects

makes it possible to look at the projects several years after

the ATP-funded research has been completed—allowing

sufficient time for knowledge to be disseminated and

progress to be made toward commercial goals. The larger

group of projects makes it possible to form a portfolio

view, compile aggregate statistics, and analyze the results

in terms of their implications for overall program success. A first step was taken toward this goal with the publication of a report in 1999 on the first 38-completed projects.^ This report takes the next step, by extending cover- age to a total of 50 projects and adding consolidated

performance metrics. It draws from and builds on the

previous report.

At the core of this study are 50 mini-case studies

covering each of the completed projects. Each of these

briefly tells the project story, recounting its goals and

challenges, describing the innovators and their respective

roles, and assessing progress to date and the future outlook. Photographs illustrate many of the projects.

Although the particulars vary for each project, certain

types of data are systematically collected for all of them.

Consistent with ATP's mission, the evaluation focuses on collecting data related to the following dimensions of

performance:

Knowledge creation and dissemination, which is assessed

using the following criteria: recognition by other

organizations of a project's technical accomplishments;

numbers of patents filed and granted; citations of

patents by others; publications and presentations;

collaborative relationships; and knowledge embodied

in and disseminated through new products and

processes.

Commerciatization progress, which is gauged in terms of

the attraction of additional capital for continued pursuit of project goals, including resources provided by

collaborative partners; entry into the market with

products and services; employment changes at the

' The Government Performance and Results Act (GPRA) is a legislative framework for requiring federal agencies to set strategic goals, measure performance, and report on the degree to which goals are met. An overview of the GPRA is provided in Appendix 1 of the General Accounting Office Executive Guide, Effectively Implementing the Government Performance and Results Act, GAO, Washington, D.C., GGD-96-118, 1996.

' For a description of the ATP evaluation plan, see Ruegg, "Assessment of the ATP," The Advanced Technology Program, Challenges and Opportunities, Board on Science, Technology, and Economic Policy, National Research Council, Washington, D.C., National Academy Press, 1999, pp. 71-81. Published

economic studies of the ATP are available at the ATP website (see above), and can be requested by calling (301) 975-4332.

"* See William F. Long's report, Performance of Completed Projects, Status Report Number 1, NIST SP 950-1, National Institute of Standards and

Technology, Washington, D.C., March 1999.

XiV INTRODUCTION
small companies leading projects and other indicators

of their growth; awards bestowed by other organizations for business accomplishments of project leaders;

and the analyst's assessment of future outlook for the

technology based on all the other information.

The approach is to provide in an overview chapter the

aggregate statistics of interest across the set of 50 projects,

such as the total number of patents and the percentage of

projects whose technologies have been commercialized.

In addition, the aggregate statistics are combined to produce composite project metrics for overall performance.

The composite performance scores allow one to see at a glance the robustness of a project's progress towards its

goals. Underlying the simple scores is a wealth of data.

Sources of Information

Data for the 50 projects were collected from many sources: ATP project records; telephone interviews with company

representatives; interviews with ATP project managers;

company websites; the U.S. Patent and Trademark Office;

in-depth project studies conducted by other analysts; aca- demic, trade and business literature; news reports; filings

at the Securities and Exchange Commission; a previous

study of the first 38 completed projects; and business

research services, such as Dun and Bradstreet, Hoover's

Online, Industry Network, and CorpTech. Each one of

the individual project write-ups was reviewed for accuracy

by the project's lead company and ATP staff.

Study Limitations and Future Directions

The 50 projects are divided into two groups: 1) the data

for the first 38 projects were collected mainly between

1997 and late 1998, and 2) the data for the next 12 projects were collected during 1999 and early 2000.^^ Since developments continue to unfold for most of these projects,

the output measures for the earlier set of 38 may have

changed significantly since the data were collected.'' Even outputs for the later set of 12 projects may have

changed since the data were collected.'

The cases provide a snapshot of progress several years

after the completion of the ATP-funded projects. The

cases, although undertaken at different calendar dates, are conducted within about the same interval of time after

ATP funding ended. Yet, different points in each technology's life cycle may be captured, depending on the technology area. Information technology projects, for example,

may be expected to be further along than advanced materials and chemical projects. Examined at a later time, there

may be less (or more) difference in the accomplishments

among projects in different technology areas. This study tracks outputs leading to knowledge

dissemination but it does not assess the actual commercialization efforts by others who acquire the knowledge. The

tracking of commercialization efforts is limited to the

direct path of impact (i.e., commercialization by the

award recipients or innovators).

Future studies may add mini-cases for additional completed projects to this group of 50, which would also be

conducted several years after project completion. Such

an extension would provide a more comprehensive view

of progress made by projects at a comparable interval in

time after the ATP-funded research has been completed.

Additional future studies may also update these studies

by looking at the projects farther out in time. An extension

of the study further into the post-project period would

allow for a fuller assessment of the value in the use of

products and processes commercialized by the award

recipients, and of the benefits resulting from the use of

the knowledge (developed during the project) by others.

"Completed" and "Terminated" Projects Defined

Projects do not necessarily finish in the order funded.

For one thing, they have different lengths, ranging from

approximately two years to no more than five years. For

another, they are required to file a final report with the

ATP and have financial and other paperwork completed

before project closeout. The financial closeout is done

through the National Institute for Standards and

Technology (NIST) Grants Office, which notifies the

ATP that it considers the project completed. This study

assesses the first 50 projects the Grants Office declared

"completed."

During the time the first 50 were in progress, another

16 projects were stopped short of completion. Some of

these were announced as award winners but never officially

started. Other projects got off the ground but were closed

for various reasons with a substantial amount of the technical work still unfinished. These "terminated" projects are

' William Long collected the data for the first 38. Jonathan Tucker, Chris Hansen, Josh Rosenberg, Jon Dryfus, Benjamin Fletcher, Kathleen McTigue,

Michael Walsh, Mariah Tanner, and Karen Seeh collected the data for the next 12, supplemented by data collected by Rosalie Ruegg.

^ In several cases, more recent information is brought into the report to determine if the designated "top performing projects" have continued to make

progress.

' Ibid.

INTRODUCTION XV
assessed according to the principal reasons they stopped

before completion. They are treated in Appendix B. While the terminated projects are generally regarded

as unsuccessful, some produced potentially useful outputs.

Appendix B illustrates a project that made an attempt to achieve its goals, only to be terminated prior to completion. It is reported in a level of detail and style similar

to that provided for the 50 completed projects.

Report Organization

Chapter 1 provides a summary overview of the perform- ance of the 50 completed projects as a group. It identifies

some major outputs that appear useful as indicators of the

degree of project success, and it uses these outputs in a prototype project performance rating system. A preview

also notes some of the broad-based benefits that this portfolio of projects is producing and likely to produce. For

additional background, the make-up of the portfolio of

projects in terms of technologies, organizational structure,

company size, and other features is provided.

The individual project reports presented in Chapters

2 through 6 highlight major accomplishments and the

outlook for continued progress. A detailed account of the

project under review is given, with attention to technical

and commercial goals and achievements, information

about technology diffusion, and views about the role

played by ATP funding. A performance rating is assigned

to each project based on a four-star scoring system. The

rating depends on the accomplishments of the project in

creating and disseminating new scientific and technical

knowledge and in making progress toward generating

commercial benefits, as well as the outlook for continued

progress.

Two appendices provide supporting information.

Appendix A provides a listing of technical and commercial

achievements of each completed project. Appendix B provides a discussion and assessment of 16 terminated projects,

together with a detailed case that illustrates how a terminated project may yield outputs of potential benefit.

XVi INTRODUCTION
ADVANCED TECHNOLOGY PROGRAM

CHAPTER 1

Overview

OVERVIEW OF COMPLETED PROJECTS

Project Characteristics

TJLhe.he nmajority of the first 50 completed projects were led by small businesses, who submitted proposals

to ATP as single-company applicants. Almost all of them had collaborative relationships with other firms and

universities. Nearly all were funded in ATP's General Competitions. More than one-third of the technologies were

classified as "electronics, computer hardware, or communications." ATP and industry shared the $208 million

in total project costs about equally.

Single Applicants and Joint Ventures

Eighty-four percent of the 50 projects were "single-appHcant projects." This means that a single company proposed the project, and that it was subject to an upper Hmit on ATP funding of $2 million and a time limit of 3 years.

The dominance of single-applicant projects occurs for

two reasons. First, single-applicant projects make up the

majority of all projects. Second, the constraint on singleapplicant project length means they end sooner than most

joint ventures.

Sixteen percent of the 50 projects were joint ventures.

Each of these projects had a minimum of two for-profit

companies sharing research and costs. Typically, the jointventure membership included other organizations, such

as other for-profit companies, universities, and nonprofit

laboratories. These projects, free of the funding constraint,

tended to take on larger problems for longer periods of time

Project Leaders

The high percentage of small companies tends to result

from a high percentage of single-applicant projects, most

of which are led by small businesses. Thirty-one of the 42

single-applicant projects, among the 50, were led by small

businesses. "Small" is defined according to the Small

Business Administration's definition and includes companies having fewer than 500 employees.

Medium-sized companies led 3 of the 42 single-applicant projects. Large companies—defined as Fortune 500

or equivalent firms—led 6. Nonprofit institutions led 2.** Of the 8 joint-venture projects, small companies led

half of them. A large company led 1. Industry consortia

led the other 3.

A Variety of Technologies

The 50 completed projects fall into five different technology areas used by ATP for classification purposes. Figure

1, the lower of each pair of bars, shows the percentages of

completed projects by technology area. The highest concentration, with 19 projects and 38 percent of the total,

is in Electronics/Computer Hardware/Communications.

Manufacturing follows with 11 projects, comprising 22 percent. Biotechnology and Advanced Materials/Chemicals

each have 7 projects or 14 percent each. The lowest concentration is in Information Technology, with 6 projects

or 12 percent.

For comparison purposes. Figure 1.1, the upper of

each pair of bars, shows the distribution across the same

five technology areas for 468 projects awarded through

1999. For the portfolio of ATP projects. Information

Technology makes up the largest share of projects,

followed by Advanced Materials/Chemicals.

"Nonprofit institutes were eligible for funding as single applicants in the first two years of the program, before Congress changed the provisions

to make them ineligible. Two nonprofits, Michigan Molecular Institute and Microelectronics Center of North Carolina, received awards in ATP's

second competition.

OVERVIEW 3
Figure 1.1 Distribution of Projects by Technology Area

Electronics/Computer

Hardware/Communications

Manufacturing

Biotechnology

Advanced IVIatehals/Chennicals

Information Technology

15% 20% 25%

Percentage of Projects

Projects classified as Electronics/Computer Hardware/

Communications and Manufacturing are more strongly

represented in the set of 50 completed projects than in the

portfolio of all ATP projects, while the other three categories—particularly Information Technology—are underrepresented. Differences in the technology make-up of

the 50 study projects and the larger ATP portfolio of projects largely reflect the changing composition of applicants

and awardees over time. Nearly all of the 50 first-completed projects come from ATP s general competitions

that were open to all technologies. A substantial part of

ATP's total portfolio comes from the focused program

competitions that were held from 1994 through 1998.

These competitions funded technologies in selected

areas of focus.

Since successful information technology projects tend

to progress faster than some of the other technology areas,

it is possible that a set of projects more reflective of ATP's

overall technology distribution would show more progress

than the current set of 50.

Collaborative Activity

Although only 16 percent of the 50 projects were joint

ventures, 84 percent had collaborative arrangements. As

shown in Table 1, nearly half the 50 had close R&D ties

with universities, and more than half the projects formed

collaborative arrangements to pursue commercialization.''

Table 1. Collaborative Activity

Type of Collaboration Number of Projects PercentageJ

Collaborating on R&D with

other companies or nonuniversity

organizations ^mugmgi

21

Close R&D ties with universities 24

Collaborating on R&D with

other companies or nonuniversity

organizations OR close R&D ties with universities

33

66%||||||

Collaborating on commercialization with other organizations

|| llllll

54%'"

Collaborating in one or more of

the above ways 42 84%

Duration of Projects

The median length for the 50 projects was three years.

Half of the projects lasted 33 to 36 months. Another group

clustered around the two-year mark. Five joint-venture

projects lasted longer than 36 months.

Costs of the Projects

As shown in Table 2, ATP and industry together spent

a total of $208 million on the 50 projects. They shared

almost equally in the costs. The ATP spent an average

''This assessment of collaborative relationships likely understates the number because it focused on the project's lead organization and probably missed some of the informal collaborative relationships of other participants.

4 OVERVIEW
of $1.5 million per single-applicant project and an average

of $4.9 million per joint-venture project. Across the 50

projects, the average total cost (ATP plus industry) per

project was $4.2 million. (Funding amounts and cost-share

percentages are displayed project by project in Chapters 2

throough 6).

Table 2. ATP Funding, Industry Cost Share, and

Total Costs of 50 Completed Projects

Type of

Project

ATP Funding

($ Millions)

Industry Cost

Share($ Millions)

Total Project Costs

($ Millions)

ATP Share of

Costs (Percent)

Industry Share of Costs (Percent)

Single-Applicant Joint-Venture

Projects Projects

64.5

57.0

121.5

All Completed

Projects

Most of the single-applicant projects had total

research costs under $3 million, and an ATP share

between $1 and $2 million. Twelve percent had total costs

in excess of $5 million. The ATP funded 53 percent of

the total cost of the 42 single-applicant projects.

Nearly half of the joint ventures received $2 to $5

million from ATP, and all but one received less than $10

million. Nearly three-quarters of the projects had total

costs (ATP plus industry) between $5 and $20 million.

Joint ventures, which comprised only 16 percent of the

total number of projects, accounted for 38 percent of

total ATP funding.
i
OVERVIEW OF COMPLETED PROJECTS

PART 2

Gains in Technical Knowledge

Ji JL major goal of ATP is to build the nation's scientific and technical knowledge base. Each of the 50 completed ATP projects targeted a number of specific technical goals designed to achieve a new or better way of doing

things. The knowledge created by each project is the source of its future economic benefit, both for the innovator

and for others who acquire the knowledge. It is a good starting place for assessing completed projects.

A Host of New Technologies and

Knowledge Gains

Knowledge gains by the 50 projects range from mathematical algorithms underlying new software tools, to the sci- ence of growing human tissue, to new techniques for fabricating high-temperature superconducting devices, to new

chemical formulations. Advances were made in each of

the five technology areas. The technologies developed in the 50 projects are listed

in Tables A1-A5 of Appendix A, column B. The set of

tables provides the reader with a convenient, quick refer- ence to the entire range of technologies.

The entries are arranged according to the five technology areas shown in Figure 1.1 and used to divide Chapters

2 through 6. It should be noted, however, that most of

these projects and the knowledge developed in them are not easy to classify. Most projects entail a mixture of technologies and interdisciplinary know-how.

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. Moreover, some of the

projects carried out by companies that have since ceased

operations or stopped work in the technology area yielded

knowledge, as indicated by the presence of publications

and patents. In these cases the direct market routes of

diffusion of knowledge gains by the innovators are likely

lost, but the indirect routes remain.

Of What Significance are the Technical

Advances?

Apart from looking downstream at long-term outcomes,

measuring the significance of technical advances is challenging. A short-run approach taken here is to look at awards presented by other organizations in recognition

of technical achievements.

A total of 15 awards for technical accomplishments were made to participants for achievements related to the ATP-funded projects. Participants in 9 of the 50 projects received awards for their technical achievements.

Participants in 4 of the projects received multiple awards.

Table 3 lists the awards granted recognizing technical

accomplishments.

OVERVIEW 7
Table 3. Outside Recognition

Project Awardee

American Superconductor

^ American Superconductor

ii Communication Intelligence #1

of Teclinical Achievements of the First 50 Completed Projects

Year Awarding Organization Award

1996 R&D Magazine

1996

1997

Industry Week magazine

Arthritis Foundation

One of the 100 most important

innovations of the year.

Technology of the Year award.

"Ease-of-Use Seal of Commendation" for the develop

ment of natural handwriting

technology, for use by disabled

people who have trouble with

keyboard entry.

DuPont 1993

^

Microwave & Rf m2igazmc^^^^^fKK//l^ ^One of the Top Products of

1993, for high-temperature vHH

superconductivity component

, technology

m - iM——

1

Engineering Animation 1994 Computerworld magazine Smithsonian Award, for the use of

information technology in the field of medicine.

Engineering Animation ^ M~MiiP 1995 Association of Medical Illustrators Association of Medical Illustrators Award of Excellence in Animation

Engineering Animation 1995 International ANNIE Awards Finalist, received together with Walk

Disney, for best animations in the

film industry.

Engineering Animation

HelpMate Robotics

HelpMate Robotics

Illinois Superconductor

Illinois Superconductor

Integra LifeSciences'"

Molecular Simulations

NCMS

Industry Week magazine "One of the 25 Technologies of the

Year, for interactive 3D visualization and dynamics software used for product development.

1996

1997

1999

1996

1994

Discover magazine

Science Technology Foundation

of Japan

Microwave & RF magazine

American Ceramic Society

New Jersey Research and

Development Council

Computerworld magazine

Institute for Interconnecting &

Packaging Electronic Circuits

One of 36 finalists for Technology

of the Year, for the HelpMate robot

used in hospitals.

Japan Prize, to CEO Joseph

Engelberger, for "systems engineering

for an artifactual environment."

One of the Top Products of 1996,

for cellular phone site filters and

superconducting ceramics.

Corporate Technical Achievement

Award.

homas Alvin Edison Award

Finalist for Smithsonian Award,

the 1996 Innovator MedalBest Paper of Conference Awards

The award went to Dr. Kohn of Rutgers University for his collaborative work with Integra on the project.

8 OVERVIEW
OVERVIEW OF COMPLETED PROJECTS

PART 3

Dissemination of Knowledge

J knowledge from the projects is disseminated—eitlier through products and processes commercialized by the

innovators, or through publications, patents, and other modes of knowledge transfer—it may benefit other producers in the economy and, subsequently, consumers. The resulting national benefits may go far beyond the returns

to the innovating firms and the benefits to their customers.

Multiple Ways of Disseminating Knowledge

New knowledge developed in a project can be diffused in

a variety of ways. One way is through the observation and

reverse engineering of the new goods or services produced

directly by the innovators and their partners. Other ways,

discussed here, are patents filed and granted by the U.S.

Patent and Trademark Office (USPTO) and cited by others;

interactions among research partners, suppliers, customers

and others and movement of project staff to other organizations; 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.

These pathways allow others to obtain the fruits of

R&D without having to pay the full cost of it. When the

technology is particularly enabling—in the sense of providing radically new ways of doing things, improving the

technical bases for entire industry sectors, or being useful

in many, diverse areas of application—the spillover benefits to others are likely to be particularly large."

Balancing Intellectual Property Protection and

Knowledge Dissemination

The ATP encourages broad dissemination of knowledge

produced in ATP-funded projects because it increases the

number of potential users of the knowledge, and, therefore, may increase national benefits. But, at the same

time, ATP does not force innovating companies to compromise their ability and willingness to pursue early commercial applications of the technology by giving away all of

their intellectual property. After all, these companies,

which contribute a substantial share of the costs, have

agreed to tackle difficult research barriers and to take

the technology to the marketplace as rapidly as possible.

Thus, it is not surprising that the amount of knowledge dissemination varies among ATP projects. Most of

the projects display some forms of deliberate knowledge

dissemination, such as publishing scientific papers and

giving presentations. Most projects also display considerable unintended knowledge dissemination: for example,

as others acquire the innovating company, as its scientists

move and work among other companies and universities,

and as a myriad of formal and informal discussions occur.

Public Disclosure of Patent Filing information

When applying for a patent to protect intellectual property, an inventor must explicitly describe the invention.

Because patent law requires that the invention be both

novel and useful, the inventor must demonstrate that the

invention is essentially different from any other invention

and must describe how it can be used. 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 and becomes a

"The generation of spillover benefits, or positive externalities, from technological advancement is an important argument for public support of enabling technologies.

OVERVIEW 9
medium through which knowledge is transferred to others.'- Hence, patents serve to disseminate knowledge.

At the same time, patent data are not perfect signals

of knowledge creation and dissemination." 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 the patent position from infringers.

Some companies may decide that patent protection is not

worth its expense, or that a strategy of trade secrets and

speed to market is a more effective strategy. Or, patents

may be filed as the basic ideas are forming, and trade

secrets used in later stages. Furthermore, the importance

of patents as a strategy varies among technology areas, and

figures more strongly in electronics and manufacturing, for example, than in computer software. As a consequence.

Figure 1.2 Distribution of Projects by

Number of Patents Filed

the absence of a patent does not mean that intellectual

property was not created. But the presence of a patent

is a signal that it was created.

Of the 50 projects, 26 projects had filed 115 patents at the time the study data were collected." Twenty-one of

the projects had among them a total of 64 patents granted.

Fifteen of the projects had filed a total of 51 patents that

had not yet been granted.

Figure 1.2 displays the distribution of the 50 projects

by the number of patents filed— including those granted

and not yet granted. Participants in 12 percent of projects

had filed a single patent, and in another 12 percent, 5 or more patents. Participants in 18 percent had filed from

1 to 5 patents. Nearly half of the projects had yet to file patents or have them granted.

Knowledge Disseminated by Patents as

Revealed by Patent Trees

Each published patent contains a list of previous patents

and scholarly papers which establish the prior art as it

relates to the invention. The citations provide a way to

track the spread of technical knowledge through patents

granted to ATP-funded projects. By following the trail of the patent referenced, it is possible to construct what

looks much like an inverted genealogy tree. Once the pool of ATP-related patents was identified,

computerized tools made available by the USPTO were

used to track subsequent patents that refer to each of the

ATP-related patents as prior art and the links recorded.'^

The process is then repeated in turn for each of these

patents, until the chain of references is complete. Next,

the information is converted into graphical form, with the

diffusion of knowledge along the path from ATP project

patents represented by links from node to node in the tree. With the passage of additional time, new branches

may spring up from nodes at the outer edges of the tree,

from nodes deep inside the tree, or from their base. To

the extent that later patents are dependent on the earlier

The U.S. copyright system, also administered by the USPTO, works somewhat hke the patent system. Although 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 generally is not as useful as patent protection. When patenting is an option, it is usually chosen over copyright registration.

Patenting was the option favored by this group of ATP-award recipients, and is the focus here.

" Despite the limitations, patent statistics serve as useful indicators of knowledge creation and dissemination, and they are widely used by researchers.

'''Patents filed and not yet granted are included here, in addition to those filed and granted, despite the fact that there is no public disclosure until

patents are actually granted. The reason for including patent filed, not yet granted, is to help offset the problem that there are substantial differences

across industries in the lag time between patent filing and grant. Due to the lag time, the absence of patents granted at the time data were collected

for the report does not mean that patents filed will not be granted in the future. Any over-count that may result from the inclusion of patents filed

that ultimately failed to be granted is likely compensated by inadvertent omissions of patents granted from the data collection.

'^The references to prior patents contained in a published patent are based on information supplied by the applicant and on research by USPTO

researchers. There is no way to distinguish between the two sources and no indication that one tends to dominate the other. (USPTO telephone

interview with ATP staff, February 11, 2000).

10 OVERVIEW
ones, the patents in the tree represent developments in

knowledge that would not have occurred, or at least not

in the same time frame, had the ATP not stimulated the

creation and dissemination of that platform knowledge.

Patent Tree Illustrating International

Knowledge Dissemination

Figure 1.3 is a patent tree for one of the 50 completed projects, a project to develop wafer ion-implantation, carried

out by Diamond Semiconductor Group (DSG), a twoperson start-up company in Gloucester, Massachusetts.

The company received two patents for work in its ATP projects, and had filed two additional patents from

project-related work at the time the data were collected

for this study. One of the patents granted in 1996, number

5,486,080, entitled "High speed movement of work pieces

in vacuum processing," involved the robotic transfer of

wafers in the fabrication of microprocessors. In the following year, two patents—one granted to VLSI Technology

and the other to Hitachi—cited the DSG patent. In 1998,

three additional patents—granted to Eaton, Fanuc, and

Tokyo Ohka Kogyo—directly cited the DSG patent. An

additional patent—granted to Jenoptik, cited the Hitachi

patent—thus indirectly citing the DSG patent. In 1999,

two additional patents—granted to Applied Materials and

Dainippon—directly cited the DSG patent, and five new

patents indirectly cited the DGS patent. Four of these

citations are once removed: a patent granted to Cypress,

a second patent granted to Applied Materials, and two

patents granted to GaSonics International; and one is twice removed: a patent granted to SEZ.

As explained in the project write-up for DSG (See

Diamond Semiconductor Group, LLC, Chapter 4), the

ATP award was instrumental in enabling the company to form an early licensing agreement with Varian Associates,

a U.S. ion-implant equipment manufacturer located in

Massachusetts, that rapidly incorporated the new technology into its equipment. This relationship provided a

strong direct path to swift impact through a U.S. company.

As illustrated in Figure 1.3, the indirect path for this project was also active and the knowledge has been spreading

quickly to companies around the world.

Patent Trees Illustrating Project Impact through

Knowledge Dissemination

The patent tree in Figure 1.4 shows citations of one of

three patents that came out of Armstrong's project to develop new materials for next generation thermal insulation. Company reorganizations, strategy shifts, and cost estimates toward the end of the project led Armstrong to

drop its plans to produce the materials.

The patent tree illustrates how an ATP project whose

direct path appears to have slowed or come to a standstill

nevertheless has the potential for impact through knowledge spread by patent citations along the indirect path

of project impact. As the patent tree illustrates, other

companies, including Dow Corning, are referencing the

Armstrong patents, and the potential for beneficial impact

from the research continues. (See Armstrong World

Industries, Inc., Chapter 6.)

Figure 1.5 shows citations by other companies of 3

patents resulting from a project led by ETOM. ETOM

had filed 12 patents that had been granted, and 14 more

not yet granted by the end of its ATP project. The small

company then went bankrupt. The patent tree illustrates

how knowledge can survive a failed creator, and continue

to be disseminated. An observer who equates business

success of the innovator, one-to-one, with ATP-project

success may be mistaken, because the indirect path may

nevertheless produce important benefits. (See ETOM

Technologies, Inc., Chapter 6.)

Patent Tree Illustrating Extensive

Knowledge Flows

Figure 1.6 illustrates just how complex knowledge flows

through patent citations can become. The path shown is

for patents resulting from an ATP-funded joint venture

led by Kopin. The project developed methods to interconnect thin-film integrated circuits side-by-side or in

layers. Obviously, the work has generated substantial

interest. This project also has an active direct commercialization path. (See Multi-Film Venture, Chapter 4.)

Chapters 2 through 6 provide patent trees, current

as of February 2000, for many of the projects that have

received patents. Although representing only one aspect

of knowledge dissemination, the patent trees extend

awareness of the influence of the new knowledge.

Knowledge Dissemination through

Other Means

Participants in more than half the 50 projects published

and presented papers in technical and professional journals

and in public forum. Altogether, the companies published

at least 180 papers and presented 245 or more papers.

Figure 1.7 gives the distribution of projects by their

numbers of publications and presentations. Thirty percent

of the projects each yielded 1 to 5 papers published or presented. At the high end, six percent of projects each

had more than 20 papers published or presented.

1 OVERVIEW 11

I
PATENT TREE KEY

Original Patent Second Generation Patent

Third Generation Patent

Fourth Generation Patent

Fifth Generation Patent

Figure 1.3 Project impact Tlirough Patent Citations,

Paralled by Strong Activity by Innovator

6026589

Thermal Systems

1999

1998

1997

1996

1995

5350926

DSG

1994

5914494

Thermo

Ceramix .

5857889

Thermo

Ceramix ^

12 OVERVIEW
PATENT TREE KEY

Original Patent Second Generation Patent

Third Generation Patent

Fourth Generation Patent

Rfth Generation Patent

Figure 1.4 Project Impact through Patent Citations,

after Innovator Reduced Activity

6013187

Dow Corning

2000

1999

1998

1997

5762829

Armstrong

5565142

Armstrong

5525643

Armstrong

1996

OVERVIEW 13
r

PATENT TREE KEY

Original Patent Second Generation Patent

Third Generation Patent

Fourth Generation Patent

Fifth Generation Patent

Figure 1.5 Project Impact Through Patent

Citations, after innovator Went Banltrupt

2000

1999

1998

1997

5670956

ETOM

5675330

ETOM

5680128

ETOM

5682154

ETOM

5657014

ETOM

5659310

ETOM

5659311

ETOM

5663722

ETOM

5663723

ETOM

5682155

ETOM •

5668546

ETOM

5537382

ETOM

1996

14 OVERVIEW
f

PATENT TREE KEY

Original Patent Second Generation Patent

Third Generation Patent

Fourth Generation Patent

Rfth Generation Patent

Figure 1.6 Patent Tree Illustrating Extensive

Knowledge Flows

6023126

Kypwee

Display

6015324

Advanced

Vision,1^

6011274

CIS Optical Imaging

6027999

Charteral Semiconductor

6014193

Toshiba 6018380

Prime View

2000

1997

1994

5377031^

MFV 5

OVERVIEW 15
Figure 1.7 Distribution of Projects by

Number of Publications and Presentations

Aside from publishing, presenting, and patenting,

ATP projects have a high rate of collaborative activities.

(See Table 1). With so many partners, collaborators, and

subcontractors involved, it would be difficult to lock up

the information. These many participants in the projects

provide rich avenues of further interaction with others,

and these interactions in turn may increase knowledge

flows through personal and professional contact. When the government enters into an agreement with

an organization, certain information about the agreement is

generally made public. Such is the case with the ATP and

company cost-sharing partnerships. Nonproprietary information has been disclosed to the public for each of the

522 projects funded by the ATP through 2000. Project

information is available on the ATP website on the

Internet (<www.atp.nist>), and new nonproprietary project

descriptions are added to the site as new awards are made.

Evaluation reports, such as this one, also provide information to the public.

To help the public learn more about the projects it

funds, ATP organizes and sponsors numerous public workshops, where companies present nonconfidential aspects

of their ATP-funded research and engage in open discussions. These workshops facilitate information flow among

ATP award recipients, and from them to other companies,

ATP project managers, other government program managers, the press, potential investors, and universities.

When a good or service incorporating new technology

reaches the marketplace, a buyer can learn a great deal

about the technology. The mere functioning of a new

product reveals some information. Intentional investigation, including reverse engineering, reveals even more. More than 60 percent of the 50 projects reviewed for this

study had some commercial products or processes based on the ATP-funded technology already on the market,

which means that product use and examination are providing others with information about the new technologies.

16 OVERVIEW
OVERVIEW OF COMPLETED PROJECTS

PART 4

Commercialization of the New Technology

technical knowledge must be used if economic benefits are going to accrue to the nation. This generally

means the introduction into the market of a new product or process by the innovating firm, its collaborators, or

other companies that acquire the knowledge. In competitive markets, the producer is typically unable to capture

all the benefits of a new product or process, and the consumer reaps part of the benefits. The higher up the

supply chain the innovation occurs, the more value-added steps there are before final consumption, and the more

intermediate firms in the supply chain may benefit, in addition to the final consumer.^^

Commercialization of Products and Processes

A Critical Step Toward National Benefits

Thirty-three of the projects had already spawned 62 new

products or processes when the data for this report were

collected. Companies in seven additional projects expected to achieve their first commercialized results shortly, and

companies in nine projects that had already commercialized their technology expected to add new products and

processes soon. Thus, nearly 80 percent of the projects had

spawned one or more products or processes in the market,

or expected to do so shortly. Table 4 summarizes the commercialization results.

A Quick Glance at the New Products

A variety of new products and processes resulted from the

projects. For a convenient, quick reference, brief descriptions of the new products or processes for each project are

listed in Tables A1-A5 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 tables, in Column B.

Table 4. Progress of Participating Companies

in Commercializing the New Technologies m

ill.

Number of ProjectsNumber of Products/Process

Product/Process on the Market

33

First Product/

Process Expected Soon

7

On the Market with Additional 9

Product/Process Expected Soon

On the Market or Expected

Soon—Totals

40

Commercialization: A Critical Step,

but Not the Final Word

Commercializing a technology is necessary to achieve eco- nomic benefit, but it does not ensure that the project is a

full success from the perspective of either the company or

the ATP. Widespread diffusion of the technology may or may not ultimately follow the initial commercialization.

For a detailed treatment of the relationship between spillover benefits (knowledge, market, and network spillovers) and commercialization, see Jaffe

(1997). He notes: "Market spillovers will not be realized unless the innovation is commercialized successfully. Market spillovers accrue to the cus- tomers 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 the original] of a new process or product, and

the profits and consumer benefits thereby created" (p. 15).

OVERVIEW 17
Nevertheless, it is significant that these products and

processes are actually on the market.

Rapidly Growing Companies

Rapid growth is generally a signal that the small innovating company is on the path to taking its technology into

the market. And one dimension of company growth

typically is its employment growth."

Figure 1.8 shows employment changes at the 31 small,

single-company ATP award recipients.'" Nearly one-fifth

of these companies experienced job growth in excess of

500 percent from the beginning of the project to several

years after the project had completed. The largest share

experienced job growth between 100 and 500 percent.

A recent look at Fortune's "Fastest Growing 100

Companies" lists 2 of the 31 then-small ATP-funded

companies on the list: Vitesse and Cree. Vitesse now

has nearly 800 employees and a market capitalization of

$15.6 billion. Cree has grown to a market capitalization

of $4.9 billion.'" Not all the small companies have grown. A little more than one-fifth of them experienced no change, or

a decrease in staff. But taken as a group, the 31 small

companies have grown rapidly. Sixty percent have at

least doubled in size; four of them have grown more than

1000 percent. The ATP helped these companies develop

advanced capabilities, which they have subsequently

leveraged into major businesses.

Figure 1.8 Employment Change at 31 Small Companies

receiving a Single-Applicant Award

"Employment is considered here as an indicator of the commercial progress of small, award-recipient companies. Assessing employment gains in a macroeconomic sense from the technological progress stimulated by the 50 projects is beyond the scope of this project.

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.

"Market capitalization and employment data cited here are from Hoover's Online Company Reports as of August 30, 2000.

18 OVERVIEW
OVERVIEW OF COMPLETED PROJECTS

PART 5

Overall Project Performance

ie 50 completed projects have exhibited varying levels of success when measured in terms of the creation

and dissemination of knowledge and the accelerated use of that knowledge for commercial purposes. Some of the

award-recipient companies have grown by leaps and bounds as they translated their knowledge gains from the

ATP-funded research into profitable and beneficial products, services and production processes. Others continue

to strive towards hard-to-achieve goals, while others show little outward signs of further progress. Several projects

were led by companies that had impressive research accomplishments but later failed in the commercialization

phase. Participants in the more successful projects have achieved impressive new performance capabilities and

have translated these into lower costs and higher quality products and processes. (Commercial benefits achieved

indirectly through the use of the knowledge by others remain to be measured.)

Composite Performance Scores

A variety of output data has been systematically collected

for the 50 projects and presented in aggregate form in the

preceding sections. The purpose was to assess the performance of the group of projects in two dimensions: 1)

knowledge creation, 2) dissemination, and 3) progress

toward commercialization.

In this section the focus shifts to combining the collection of outputs for each individual project, to measure how

it performed overall. The result is a composite perform- ance score for each project, computed from an extensive

set of outputs linked to the ATP mission and goals. The

composite performance scores are reported in chapters 2

through 6. The distribution of scores is reported here.

The composite performance scores are computed from

available output data'" indicating the creation and dissemination of knowledge, i.e., a) award-winning technologies,

b) patent filings, c) publications and presentations, d) new

and improved products/processes now or expected, and e)

collaborations. These output measures are combined with

available data indicating progress toward commercialization of the new technology, i.e., a) attraction of capital,

including resources made available for commercialization

through collaborative activities, b) employment gains, c)

company awards for business success, d) getting product

and processes into the market, and f) outlook for continued future progress by the award-recipient companies.

The resulting composite performance scores are computed

for each of the 50 projects. The scores are expressed in

terms of a zero-to-four star rating system, where a score of one star or less signals poor overall performance; two stars, moderate performance; three stars, strong performance,

and four stars, outstanding performance.''

These ratings should be viewed as roughly indicative

of overall performance. Limitations include the fact that

not all relevant effects are captured; alternative algorithms

The available data do not capture all developments that may be important to ultimate project performance. For example, the data do not capture

informal discussions and mobility of workers that may be important avenues for the flow of knowledge. They do not capture details about sales vol- ume and the value of commercialized products and processes. Inclusion of additional effects might produce improved measures of overall performance. Also, changes in the way in which the various output measures are assigned points and combined to compute the composite score may offer

potential for improved measures. The scoring system was developed by Rosalie Ruegg, TIA Consulting.

The performance metrics are consistent with the view of varying degrees of success—with knowledge creation and dissemination constituting partial

success, and a continuation into commercialization constituting a fuller degree of success in terms of project progress. Some companies carried out

their proposed research with a degree of success during the time of ATP funding, but then did not continue pursuit of their project's larger goals after

the ATP funding ended. At this stage of evaluation, ATP considers such projects only partial successes, because the direct path for achieving project

goals is truncated. Such projects are not among the higher scorers in this report. The reader is reminded, however, that commercial developments

along the indirect path may nevertheless occur—particularly if the project produced effective knowledge transmitters, such as patents and publications—and future performance scores may need to be revised to reflect commercial developments along the indirect path of project impact.

OVERVIEW 19
for computing the composite ratings may be superior to those used, and the ratings at best reflect performance in

terms of the underlying project output metrics, and not

in terms of the ultimate national economic benefit from

the project.^^

Scoring the First 50 Completed Projects

Figure 1.9 shows the distribution of the 50 projects by their

composite performance scores. Perhaps not surprisingly,

the largest group of projects, 34 percent, scored in the twostar category—moderate progress, but not particularly

robust overall. Sixteen percent (8 projects) scored in the

top category, receiving four stars. Another 26 percent (13

projects) scored in the three-star category, also strong projects. Twenty-four percent of the projects scored one star

or less—perhaps not surprising for companies taking on

difficult goals.

The 8 top-scoring projects overall included 7 singleapplicant projects led by small companies and 1 large

joint venture led by an industry nonprofit organization.

Leaders of these projects include Engineering Animation,

Inc.; Integra LifeSciences; Aastrom Biosciences, Inc.; Cree, Inc.; Tissue Engineering, Inc.; Torrent Systems,

Inc.; American Superconductor Corporation; and the

National Center for Manufacturing Science.

The next tier of relatively strong projects includes

8 projects led by small companies, 1 project led by a

large company, 1 project led by a medium-sized company, and 3 joint venture projects.

Performance by Teclinology Areas

Figure 1.10 illustrates the distribution of projects in the five

technology areas, according to their composite performance

scores. The sample sizes are too small to support the drawing of general conclusions about how projects in the different technology areas will perform. For this group of 50,

several observations can be made about performance to date.

The Biotechnology projects exhibit a bimodal distribution, with either outstanding/strong performance or poor

performance. The Information Technology projects cluster

into the outstanding and moderate performance groups; none are in the weakest categories. The Manufacturing

and the Electronics/Computer Hardware/Communications

Figure 1.9 Distribution of Projects by Overall

Performance Score

projects are distributed across the spectrum of perform- ance categories. Most of the Advanced Materials/

Chemicals projects are in the moderate performance

category, and a sizable fraction is in the weak-performing

group. (See "Characteristics of the Projects" earlier in

this chapter for the simple distribution of projects by

technology area.)

Project Performance Translated into

Economic Benefits

Progress signaled by strong composite performance metrics is translating into economic benefits. Let us consider,

for example, estimated benefits of projects among the

top scorers. Three of the top performing projects developed medical technologies that were evaluated by economists at the

Research Triangle Institute (RTI), a consulting firm in

North Carolina.-' RTI economists provided early estimates

of the value of a new biopolymer to repair fractures, develThe degree of correlation berween a project's performance score and its long-run societal benefits is impossible to know at this time. On the one

hand, few outputs and low scores for a project cast doubt on the likelihood that it will attain the large benefits originally envisioned. On the other, it

is easy to imagine potential exceptions. For example, a single publication or patent could have enormous enabling influence on other U.S. companies

who respond in a timely way with commercial activity. Or, a company may work in secrecy for a long period of time with no visible outputs, and then

suddenly explode on the scene with a single output that will yield large societal benefits. Similarly, it should be noted that projects with the same

scores are not necessarily equal in their potential benefits. They are, however, somewhat comparable in terms of the robustness of their progress to date.

RTI, A Frameworkfor Estimating the National Economic Benefits ofATP Funding ofMedical Technologies, Prepared for the Advanced Technology Program, 1 998.

20 OVERVIEW
Figure 1.10 Distribution of Composite Scores by Technology Areas

5.

0)

a.

CDE

13

1.

'

] ^

Information Technology

H Biotechnology

Electronics

Manufacturing

H Materials

. y

4 Star 3 Star 2 Star

Percentage of Projects

1 Star 0 Star

oped by Integra LifeSciences; a system for replicating stem

cells, developed by Aastrom Biosciences, Inc.;'^ and a new

prosthesis material—animal-derived extracellular matrix, or ADMAT—developed by Tissue Engineering, Inc. Biocompatible Polymers for Cartilage Repair: The

RTI study estimated the medical cost savings from the

project led by Integra, in terms of avoiding second surgeries to remove implants, such as pins and screws, when

trouble arises. It estimated benefits at $98 million, all

attributed to ATP.'" Integra has shown continued robust

progress since the RTI study was completed several years

ago. At the time the project analysis for this mini-study was completed in late 1999, company employment had

increased four-fold, and a recent check showed yet another

big jump. Through its commercial partners, Integra's technology is becoming embodied in surgical screws, tacks,

and other fixation devices for attaching soft tissue to bone

in the knee and shoulder. Patient benefits include avoid- ance of medical complications and further surgeries associated with utilizing existing technologies, as well as lower

surgical costs. Stem Cell Replication: Because of the difficulty

of estimating the value of patient pain reduction and

improved health outcomes, the RTI study also based the

benefits estimates for Aastrom's stem cell expansion technology only on the reduction in procedure costs, although

it is the patient pain-avoidance and improved outcome

effects that were the main expected benefit of this technology. By allowing a small amount of stem cells to be

multiplied into a larger quantity, the technology reduces

donor clinic visits to collect the stem cells; reduces procedure hours; is easier for medical staff to perform; reduces

treatment costs; substantially reduces patient pain and

negative side effects; and has been shown to result in

better treatment outcomes.

RTI economists estimated that Aastrom's replication

system, once implemented, would save about $87 million

(in 1997 dollars) in the costs of providing bone-marrow

transplants for cancer treatment without the acceleration

provided by ATP support and $134 million with the acceleration. The difference, $47 million, is the estimated

additional value, in terms of cost savings only, attributed

to the ATP, based on this one application area. Aastrom, the award recipient, has since continued

unabated pursuit of the commercialization of its AastromReplicallTM System. In recent clinical trials, the system was used successfully to enable cancer patients—for which

there were otherwise no donors—to receive stem cell

Aastrom Biosciences, Inc., utilized human hematopoetic stem cells derived from blood or bone marrow for its ATP supported research and continues

to use bone marrow and umbilical cord blood in its development efforts. The bone marrow and cord blood utilized by Aastrom during its ATP sup- ported research complied with the regulations for the protection of human subjects as codified by the Department of Commerce at 15 CFR Part 27.

The quantitative estimate, which was net of costs, did not include benefits of patient health effects and pain avoided.

OVERVIEW 21
transplants by expanding tiny amounts of cord blood samples that matched the patients.-'' According to the director

of medical oncology at Hackensack University Medical

Center, "These results suggest that we may have found a new treatment approach that will enable more patients to

receive treatment for this very serious and often fatal disease."" According to the American Cancer Society, 30,000

new cases of leukemia are expected in 2000 and approximately 20,000 people will die from the disease this year, making new, more effective treatments of great value

to society.-"

Biomaterials for Prostheses: Focusing on the first expected application of Tissue Engineering's ADMAT

technology, namely, the repair of damaged knee ligaments

(specifically, anterior cruciate ligaments, or ACLs), RTI

economists also estimated benefits. But in this case, unlike the previous two, RTI was able to estimate benefits

expected to result from improvements in the quality of life

for patients receiving the treatment, by using a "qualityadjusted-life-years" index value.-"' RTI estimated about

$15 billion in expected net benefits from the new technology attributable to ATP funding.

Printed Wiring Boards: Another of the top performing projects is a joint venture led by the National Center

for Manufacturing Sciences (NCMS) to develop a suite

of advanced technologies for producing printed wiring

boards, the backbones of electronics products. Two studies conducted by Professor Albert Link of the University

of North Carolina-Greensboro assessed the impact of the

project's extensive use of collaborative effort.'" The Link studies estimate that the project's collaborative effort produced at least a 53 percent reduction in

overall research costs, resulting in an R&D savings of at

least $35.5 million to produce the new capabilities needed

by the industry for international competitiveness.

Evidence is strong that the project produced leap-frog

technologies that have yielded productivity improvements

for member companies and improved the competitive

position in the world market for PWBs of the hundreds

of small U.S. suppliers who were themselves lacking in

advanced R&D capability." The award-winning papers,

new products, and other knowledge dissemination activities by the joint venture have helped to spread the new

capabilities across the entire industry.

At a recent technology exposition by ATP-funded

companies, an advanced circuit board was displayed that

incorporated many of the innovations developed by the

ATP-funded project. A small U.S. company that did not

participate directly in the project was said to have produced it. This new PWB was provided by NCMS as evidence of the effective knowledge flow from the project

to others.

Scalable Parallel Programming: Another of the top

performing projects is a project led by Torrent Systems,

Inc. The project developed a component software system

that insulates programmers from the complexities of parallel programming while allowing them to use it productively in scalable applications. Torrent delivered this new

capability in its software product. Orchestrate^"^'. An early

company user of the new software reportedly was able to

increase its revenue by $100 million per year." Torrent's

technology is making it possible for eBusinesses and other

companies to process and analyze unlimited volumes of

data. Torrent was listed in ComputerWorld's "100 Hot

^ Cord blood, the blood in the umbilical cord and placenta after the birth of a child, has been found to offer an alternative source of stem cells for transplantation that allows a higher degree of tissue mismatching while still providing an acceptable transplant. As a result, a cord-blood banking infrastructure is being established, but the small amount of cells available from this source restricts its use. In recent clinical studies, several adult cancer

patients needed very high-dose chemotherapy to be followed by a stem cell transplant, but no suitable bone marrow donors could be found. In the

cord blood bank, small samples were found that provided a match, but the amounts were too small to be used. In the clinical trials, the AastromReplicallTM System was used to replicate the number of matching cord blood cells, allowing the patients (for which there were otherwise no donors)

to receive stem cell transplants.

" PRNewswire, April 19, 2000, Report on results from Hackensack/Aastrom Studies.

llnd.

-'' For a description of the use of Quality Adjusted Life Years (QALY) in evaluating patient benefits in evaluation studies, see Andrew Wang,

"Key Concepts in Evaluating Outcomes of ATP Funding of Medical Technologies," Journal of Technology Transfer, Vol. 23 (2), 1998, pp. 61-66.

^" See A. N. Link, Advanced Technology Program Case Study: Early Stage Impacts of the Printed Wiring BoardJoint Venture, Assessed at Project

End, Report prepared for the Advanced Technology Program, 1997.

^' The president of NCMS credited the ATP project with saving the PWB industry in the LInited States with its approximately 200,000 jobs.

ATP Technology Showcase, "Ten Years of Innovation and Impact," Russell Senate Building, Caucus Room, April 5, 2000. Discussions with an NCMS spokesperson.

Information from Hoover's on-line company search and Torrent's website, current August 31, 2000.

22 OVERVIEW
Emerging Companies" in 1998, in addition to receiving a number of other awards recognizing both its software technology and business acumen. Although Torrent had fewer

knowledge-dissemination outputs than the other

top performing projects, its exceptional showing on the

commercialization side boosted it into the four-star group.

HTS Wire: The project led by American

Superconductor Corporation (ASC) was another of the

top projects in terms of performance. The new technical

capability developed by this company is enabling it to produce high-temperature wire for use by electric utilities and as a component in motors, transformers, and specialty

magnets to reduce their energy consumption. With an

estimated sales volume of $15 million in 2000, and a rapid

sales growth rate, this small company is launching the

commercialization of its technology. The technology's

ability to reduce energy costs has taken on increased significance in the face of rising energy prices.

Visualization Software: As in the preceding examples. Engineering Animation, Inc., leader of another of the

top performing projects, has aggressively and successfully

pursued applications of its award-winning imaging soft- ware capabilities developed in the ATP-funded project.

The company used its ATP-funded technology to improve

the training of doctors, as well as to guide medical procedures. Patients in a particular surgical procedure that

employed the visualization software reportedly had better

outcomes as a result. Founded by two professors and two graduate students

in 1990, the company had 20 employees at the time ATP

made the award to it. The company now employs approximately 1,000, had sales of $71 million in 1999, and experienced a sales growth rate over the past year of 34 percent.

According to company officials, the ATP award allowed it

to significantly extend its capabilities in computer visualization and computations dynamics and to form important

collaborative relationships that it has since been able to leverage in many different directions. Recently, it has

extended and deployed its award-winning visualization

capabilities to develop a virtual factory technology, implemented recently at Ford, which enables faster design and

analysis of factory models. Its many customers and clients

have benefited from the company's extended capabilities.

To these examples from the group of four-star projects, we can add examples of other strong projects from

among the three-star projects that are delivering important

economic benefits. Some of these projects in this group

may outperform the four-star projects in some ways, but

received lower composite scores based on all the recorded

outputs.

Auto Body Manufacturing Assembly: One such project, led by the Auto Body Consortium (ABC), has generated documented production cost savings and improved

automobile quality, as well as the potential for extending

these same kinds of benefits to the manufacturing assembly of other products. A study by the CONSAD Research

Corporation projected economy-wide benefits of about $3

billion in 2000, attributable to deployment of the ABC

technology in automobile production." Efforts are underway to extend the use the technology from the automobile

industry to other industry sections."

DNA Sequencing System: Another example from the

three-star group is provided by a project led by Amersham

Pharmacia Biotech, which is credited with accelerating

development of an enzyme important to the speed of the

human genome project—where timing is of enormous

significance.

Highly Integrated Digital Circuits: An example of a

particularly strong commercialization showing from the

three-star group is a project led by Vitesse Semiconductor

Corporation. Vitesse has successfully applied gallium

arsenide (GaAs) material in the volume production of

highly integrated and very complex digital circuits. Most

of the world's telecommunications companies now use

Vitesse chips; virtually every long-distance call passes

through its integrated circuits. The project's main avenue

for knowledge dissemination was through commercialization, rather than patents and publications.

To these examples, we can add a number of other

promising technologies—technologies that may improve

productivity, facilitate better weather forecasts, improve

communications, enable new drug discovery, reduce energy

CONSAD Research Corporation, Advanced Technology Program Case Study: The Development ofAdvanced Technologies and Systems for Controlling

Dimensional Variation in Automobile Body Manufacturing, National Institute of Standards and Technology, NIST OCR 97-709, 1997. A new study is

currently underway, led by MIT researchers, to extend and update the analysis of this project. Contact ATP's Economic Assessment Office for

further information.

ATP has been exploring the diffusion of technologies developed with ATP support through the Manufacturing Extension Program (MEP) that is

also operated by NIST, with the ABC project as a case in point. The output measures used in computing the composite scores did not register this type of dissemination activity.

OVERVIEW 23
costs, and lower loss of limb and life globally by improving

detection of old land mines and toxins.

What Difference Did ATP IVIake?

The ATP aims to fund projects that would not take place

in the same timeframe, scale, or with the same goals without ATP's support. A project may be successful in terms

of achieving its goals, but if the same accomplishments

would have occurred in the same timeframe without the

ATP, then the program has not had the intended effect.

Similarly, evaluation studies of ATP should apply the principle of "additionality" to correctly distinguish between

benefits that would likely have occurred anyway and those

benefits that are reasonably attributable to the ATP.

In preparing the 50 individual mini-case studies in

this report, project leaders were questioned about the role

ATP funding played in their projects.^'' Their answers are presented in the detailed discussions of Chapters 2-6 and

summarized in Table 5. Twenty-six of the 44 project respondents (59 percent)"'

indicated that they would not have done the project at

all without ATP funding. Indeed, some participants said

their companies would have gone out of business had the

ATP award not been made.^**

Eighteen respondents (41 percent) said they would

have attempted the project at some later date or slower

pace, and that the ATP funding enabled them to accelerate the technology development. Thus, for the 44 projects

responding—none would have been completed in the

same time frame without ATP funding.

The acceleration of some of the projects may seem

short, but the value of even a small acceleration can be

substantial. The six-month lead in developing ThermoSequenase, a DNA polymerase that is both thermostable

TaDie 5. cttect ot Air Funding on

Conducting Projects

Effect on Number of HHH Project Projects

Percentages of Respondents >

Would not have

proceeded without

ATP funding

26 59%

Would have pro-

^C^CCl^U WlLllUUL i\ 1 1 funding, but with a delay of:

WPP^41%

6 months IHHllft 1

18 months

21 months fHIH

24 months ^(^Rl^ imi

5 Years or more .

unspecified ^^^^^Hi

Total ^KKfKf 44

and accurate, for DNA sequencing is an example of how

a small acceleration may be significant. Speed in developing and commercializing a technology can also mean global

market share for U.S. producers.

Receipt of an ATP award also has reportedly enhanced

the ability of some companies to raise additional capital

and form collaborative relationships for research and commercial activities. Several reported that receipt of the

ATP award had enabled them to gain in international

competitiveness.

Throughout the project selection process, beginning with the application, ATP presses the questions of why the project requires ATP funding in

order to be undertaken, what will happen if the ATP funding is not provided, and how will the expected outcome differ with and without ATP

involvement. During the evaluation process, the question is again asked in a retrospective way, i.e., what happened that was different as a result of the

ATP.'^ In either case, the question is hypothetical, and the accuracy of results is difficult to establish. A recent study by Feldman and Kelley sheds

light on the question of additionalirv-. It investigated what happened in the aftermath to projects proposed in ATP's 1998 competition that were and were not funded. The findings provide evidence that ATP made a difference to project outcomes. (See Maryann P. Feldman and Mar\ellen R. Kelly,

Winning an Awardfrom the Advanced Technology Program: Pursuing R&D Strategies in the Public Interest and Benefiting From a Halo Effect^ NISTIR 6577

(Gaithersburg, Md.: NIST, 2001).

" Personnel changes, severe company financial distress, or lack of clarity in responses to interview questions made it impossible to include 7 of the 50

projects in this tabulation.

W. Long, Performance of Completed Projects^ number 1, March 1999, p. 132, endnote 15.

Another factor potentially influenced by ATP funding—the scope and scale of the project—was not explicitly covered.

*' The Printed Wiring Board Joint Venture project had a split response: half the tasks would not have been done at all and half would ha\ e been delayed

by at least a year. This result is recorded consen atively in Table 5 as a nvo-year delay.

24 OVERVIEW
What Constitutes Success and Failure for ATP?

Because individual project failure must be allowed and

tolerated in a program that focuses on overcoming challenging technical barriers to innovation, it is essential to take a project-portfolio approach to assessing ATP. And,

success should be assessed against the legislated mission

of the program.

Three general tests, and several additional specific

tests—all derived from ATP's mission—if applied after

sufficient passage of time, should reveal the extent to which ATP has successfully met its mission: Test 1: Has

the portfolio of ATP-funded projects overall produced large

net benefits (i.e., benefits minus costs) for the nation.-' Test 2: Has a substantial share of the net national benefits accrued to citizens and organizations beyond the ATPaward recipients.^ Test 3: Did ATP make a substantial

positive difference in the size and timing of the benefits.'""

Additional specific tests of success include the following: Did the projects produce new scientific and technical

knowledge.? Did ATP increase collaboration.'* Were small

businesses able to participate.'' Were manufacturing capabilities improved.'' Did U.S. businesses become better

able to compete in global markets.''

Partial Answers

While the ultimate answers to these success "test questions" depend on the long-run impacts of the portfolio of

ATP projects, the performance-to-date of the subportfolio

of 50 projects provides partial answers. The performance ratings show that the majority of the

projects are still alive, in the sense that progress continues

to be made. More important, they reveal a core group of

highly active and productive projects that are successfully

accomplishing their big project goals.

The ATP awarded a total of $104.0 million to the 50

completed projects and another $10.5 million to 16 terminated projects (see Appendix B), bringing total ATP

spending on 66 projects completed or terminated by May

1998 to $114.5 million. What is the public investment producing in the way of benefits.'' Estimated benefits attributed to ATP from just a few

of the top-performing 50 projects not only greatly exceed

ATP's funding for all of the 66 projects, they also far exceed the total of ATP costs for all of the 522 projects

funded to date.

In addition to benefits exceeding costs, there is strong

evidence that benefits are extending well beyond those

captured by the award recipients. There is substantial

evidence that knowledge was generated by the projects

and that it is being disseminated to others through publications, presentations, patents, products, and other means. The patent trees developed for these projects reveal rich

citing of the patents by others. The products and processes generated by the projects are also yielding benefits to

others: patients are receiving spillover benefits from better medical treatments at lower costs; consumers are receiving spillover benefits when they buy superior products for which they pay less than the full value; and companies are receiving spillovers when they increase their

productivity or achieve greater value added by using ATPfunded technologies.

This completes the portfolio view of the ATP. Now

let us look at the 50 individual projects.

The tests of success are taken from a presentation by Rosalie Ruegg before the National Grants Management Association's Annual Conference,

Federal Bar Association Panel, April 4, 2000.

OVERVIEW 25
11


\DVANCED MATERIALS AND CHEMICALS

ALLIEDSIGNAL, INC.

A Process for Making Ceramic Parts

.any 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. COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) *

Safe, Low-Cost Fabrication of

High-Performance Ceramic Parts

With the recent development of high-performance 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 performance and reliability.

... a novel near net-shape

. . process for making high-performance

ceramic parts for automobile and

aircraft engines.

Ceramic substitutes for metal have performed 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.

Cost and Safety Issues Hinder Use

Despite such performance advantages, the application of

advanced ceramics has been held back by the high cost

of fabrication. Whereas

metal can be meltprocessed 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 forming

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 developed 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

A 16-blade silicon nitride turbine wheel

for use in small turbogenerators.

ALLIEDSIGNAL, INC. 29
An automated gelcasting machine capable of forming

10,000 ceramic turbine wheels per year.

to burn 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.

. . . 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 Turbomachinery Components," AlliedSignal began receiving

funds from the Defense Advanced Research Projects

Agency for work that grew directly out of the ATP-funded

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.

. . . acrylamide is a cumulative neurotoxin,

and safety concerns had prevented the

technology's widespread use.

AlliedSignal has constructed a new plant for manufacturing ceramic parts, including those made with the gelcasting technology. Since the close of the ATP project in

June 1995, 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

Department of Energy and the Defense Advanced

Research Projects Agency to advance gelcasting technology into commercialization.

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.

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.

Near net-shape

turbine wheels

for use in commercial or military jet

engine starters.

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 performance — 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

30 ALLIEDSIGNAL, INC.
PROJECT HIGHLIGHTS

PROJECT:

To develop a low-cost, near-net-shape gelcasting process for making structural ceramics in a safer, less-costly way than conventional gelcasting based on

acrylamide, a cumulative neurotoxin. Successful development of this 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: I presented the new technology at several professional conferences; M 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 H 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.

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.

Composite Performance Score: * *

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

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 gelcasting 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

. . . invested . . . another $3 million

of its own money . . . aimed at the

development and installation in 1998

of an automated gelcasting system . . .

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 applications in small parts for jet engines, small

turbine generators for hybrid electric/fossil fuel cars and

auxiliary power systems for aircraft.

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

. . . made possible by the ATP

grant was the establishment of a

technology-development relationship

between AlliedSignal and Oak Ridge

National Laboratory.

ALLIEDSIGNAL. INC. 31
believes that with the help of the ATP funds, it has now

pulled even with Kyocera in most applications and is able

to make superior-quality products in several areas. Another clear benefit made possible by the ATP grant was the establishment of a technology-development relationship between AUiedSignal 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 AUiedSignal for two years.

32 ALLIEDSIGNAL, INC.
ADVANCED MATERIALS AND CHEMICALS

BIOTRACES, INC.

A

Highly Sensitive Detectors for Biomedical

and Environmental Diagnostics

technology that can detect minute traces of biomolecules — pesticides, bacteria in water, organic toxins

lil<e 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.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * *

Detecting Minute Amounts of

Unwanted IVIolecules

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 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.

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.

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 technology for

enhanced immunoassay, chromatography 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 technology and hopes to begin offering

its own commercial products widely in the near future.

BIOTRACES, INC. 33
PROJECT HIGHLIGHTS

PROJECT:

To develop instrumentation based on multiphoton detection (MPD), highspeed/high-sensitiviry sensors and proprietary software, one that can detect minute concentrations of chemicals in gas, liquid or solid matrices —a technology 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 69%

Company 773 31%

Total $2,491

ACCOIVIPUSHIVIENTS:

BioTraces developed MPD instrumentation, both hardware and software, as

well as biomedical applications of the technology for enhanced immunoassay,

chromatography and nucleic acid analysis. The company: H applied for two patents on technology developed during the ATP project: "Enhanced Chromatography Using Multiphoton Detection" and

"Ultralow Background Multiple Photon Detection;" M negotiated with the French company Pasteur-Merieux Connaught an

agreement under which BioTraces developed an MPD-enhanced quantitative polymerase chain reaction assay for measuring tiny amounts of DNA and RNA;

H 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; H 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;

U 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; B has received since the start of the ATP project $1 million in equity

investment to support commercialization of the new technology; and M entered into discussions with two venture capital firms about securing

an additional $4 million in equity funding in 1998 or 1999.

COMiVIERCIAUZATION STATUS:

Commercialization is in progress. Applications of the technology are under- way in the petrochemical 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 available in 1998 or 1999.

OUTLOOK:

Once BioTraces works out a strategy for protecting its intellectual property,

the new technology is expected to be disseminated more aggressively. Given its potential use in detecting viruses, bacteria, toxins and pollutants,

the ATP-funded 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.

Composite Performance Score: * *

COIVIPANY:

BioTraces, Inc. 10517-AWest 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

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 expects to launch wide-scale

sales of the ssMPDTM in late 1998

or early 1999 . . .

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 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 wide-scale sales of the ssMPD in late 1998 or early

1999, after enhancing protection for its proprietary soft- ware 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 polymerase chain reaction

assay for measuring tiny amounts of deoxyribonucleic acid

(DNA) and ribonucleic acid (RNA). And in June 1997, it

arranged for Genetics Institute, Inc., to evaluate the MPD

34 BIOTRACES, INC.
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

firms 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 funds also helped it develop research alliances and

improved its ability to raise investor capital.

ADVANCED MATERIALS AND CHEMICALS

GELTECH INCORPORATED

Making Low-Cost, High-Quality Glass

Microlenses at Low Temperature

T.iny 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 higher quality, but they cost much more than

'

plastic lenses.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * *

Technology for Making Small, Complex

Silica Micro-Optics

^

This ATP project with Geltech, a small Florida company,

developed a novel method for producing low-cost, highquality silica-glass microlenses based on "sol-gel" technology pioneered by the company. Geltech was founded in

1985 to commercialize micro-optics technology (dealing

. . . the technology could not produce

refractive microlenses at a cost low

enough to penetrate this market . . .

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 perform satisfactorily. In addition, the Army recentwith 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 formed into

larger molecules (polymerized) and combined with a liquid

. . . 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.

ly gave Geltech a Small Business Technology Transfer

Research Phase II award for research using technology partly

developed with the ATP funding. 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.

GELTECH INCORPORATED 37
PROJECT HIGHLIGHTS

PROJECT:

To develop a method of casting net-shape (no grinding necessary)

pure silica glass micro-optics at room temperature.

Duration: 4/5/1993 — 7/4/1995 ATP Number: 92-01-0074

FUNDING (in thousands):

ATP $1,323 48%

Company 1.456 52%

Total $2,779

ACCOIVIPUSHIVIENTS:

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: M had five prototype refractive lens devices tested by a customer and

found to perform satisfactorily; H used the technology to develop diffraction gratings, for use in conjunction with lasers in optical systems, with market introduction just

beginning;

M 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; M used the procedures for making optical-quality molds, developed in

the ATP project, as initial steps toward commercialization of plastic

micro-optics;

H 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 H recently received a Small Business Technology Transfer Research

Phase II award from the Army for research using technology developed

in the ATP project.

COIVIIVIERCIALIZATION 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, producers 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 detecting toxic gases (details are

still confidential), are already benefitting from the technology.

Composite Performance Score: * *

COIVIPANY:

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

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 refractive 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 early to tell whether commercialization of its diffraction gratings will succeed. Acceptance of 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 —

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.

to develop a porous-glass 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 confi38 GELTECH INCORPORATED
dential. The company is also using some of the technology

to develop plastic micro-optics, which are lighter and less

expensive 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 revenues from less than a quarter million dollars in

1992 to about $5 million three years later.

Potential Broad Applications

If the unit-cost of diffraction gratings continues 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.

. . . ATP funding helped the company form

alliances with research partners . . . enabled it to conduct research . . .

critical in helping Geltech survive . . .

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.

GELTECH INCORPORATED 39

ADVANCED MATERIALS AND CHEMICALS

IBM CORPORATION

Methods for Making

New Optical Switches

j[nfc .nformation is transmitted in a variety of ways in a developed economy: by surface mail, teleplione, 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 optical 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. COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.)

No Stars

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. Current-generation switches convert data from

an optical to an electrical signal, do the necessary switch-

. . . bandwidth could be multiplied

many fold, while heat generation

and cross-talk . . . could

be greatly reduced.

ing, and then convert the data back to an optical signal, a process th-at 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 com-

. . . this technology . . . may . . . be useful in telecommunications,

rather than computers.

munications 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.

Market Fails to Materialize as Expected

Commerciahzation 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.

IBM CORPORATION 41
PROJECT HIGHLIGHTS

PROJECT:

To develop high-speed, inexpensive optoelectronic switches using nonlinear

optical polymeric waveguides suitable for use in the data communications

industry.

Duration: 8/1/1992 — 7/31/1995 ATP Number: 9i-0l-00l7

FUNDING (in tliousands):

ATP $1,787 44%

Company 2.235 56%

Total $4,022

ACCOIVIPLISHIVIENTS:

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 fact that IBM: M 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); H published more than 20 papers in professional journals in areas

related to the project goals; and M presented technical results at several professional society meetings and conferences.

CITATIONS BY OTHERS OF PROJECT'S PATENTS: See Figure 2.1.

COiVilVIERCIALIZATION STATUS:

The technology has not yet been commercialized by IBM or others. The

market opportunities for the polymer-based switches have 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 multiplexing (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.

Composite Performance Score: No Stars

COIVIPANY:

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

New Opportunities Arising

The rapid expansion of digital data transmission, however,

is hkely 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, broadband telecommunications. Another possible application is

in microprocessor chip-to-chip 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. 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 technology is a core technology for the polymeric materials and devices that IBM demonstrated,

and these products have potential in a number of future

applications.

The support enabled company researchers

to publish more than 20 papers in professional journals, enabling the technology to

be disseminated among other researchers.

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 journals, enabling the

technology to be disseminated among other researchers.

The knowledge gains are well documented.

42 IBM CORPORATION
Figure 2.1 Patent Tree for Project Led by

IBM Corporation: Citations by Others

of IBIVI Corporation Patents

PATENT TREE KEY

Original Patent Second Generation Patent ^# Third Generation Patent

Fourth Generation Patent

Fifth Generation Patent

1999

1998

5607799

IBM

1997

ADVANCED MATERIALS AND CHEMICALS

IBM CORPORATION

Insulating Foams for Microelectronics

'ince the invention oftiie integrated circuit (IC) in 1958, ctiip designers have enhanced processing speeds

by squeezing more and more transistors onto microchips. They have accomplished this by shrinl<ing transistors,

by shrinking the distance between them, and by increasing the number of layers in a chip. These improvements

have reduced the time it tal<es for electrical signals to travel within integrated circuits by reducing the length of the connecting lines between

transistors. Further development of more densely integrated semiconductor

circuits depends critically on the availability of effective electrical insulators.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.)

No Stars

The Challenge of Improving Electrical Insulation

The electrical and material properties and its geometric

shape determine an insulator's effectiveness. An insulating material must have a minimum geometric size, depending on its properties, to provide the desired electrical

insulation. As integrated circuits shrink, the room availFurther development of more densely

integrated semiconductor circuits depends

critically on the availability of effective

electrical insulators.

able for the material insulating the wires is reduced, and if

insulation is inadequate, the current that carries signals on

the chip "leaks," causing signal confusion or "cross-talk."

This lowers the reliability of the logic, memory, or processing functions being executed by the integrated circuit.

A group of researchers at IBM recognized that

progress toward more densely integrated circuits would be

impeded by the material properties of the current industry

standard for insulation, silicon dioxide. There are a number of materials with dielectric constants (k)—a measure

of the ease with which electrons pass through a material

lower than that of silicon dioxide. The ideal insulator, in

terms of its impermeability to electron flow and fields, is

a vacuum. Air (e.g., air pockets in foam) is an excellent

alternative: by creating pores filled with air in a material,

its dielectric constant can be decreased. Thus, the

researchers sought to figure out how to control the process

of creating pores in a material (controlled porosity), with

the goal of developing a method of providing new insulating materials to successive generations of IC devices.

Research too Uncertain for Company Funding

At the time IBM researchers submitted the proposal, few

internal resources were available for hardware development due to a shift in priorities in favor of software development. In addition, IBM management considered the

development of controlled porosity into a commercially

viable practice to be too uncertain a prospect to justify the

level of internal support necessary to mount the required

research program.

At the time, company resources addressing electrical

interconnection problems were focused on a research

effort to substitute copper for aluminum in the fabrication

of chip wires. IBM management believed that substituting copper for aluminum in the fabrication of wires might

circumvent the need for improved insulators, copper being

a much better conductor than aluminum. Some believed

that the substitution of copper would allow for increases

in signal speed sufficient to eliminate the need for the

increased levels of integration that would make a new

type of insulator necessary.

These factors combined to make the company unwilling to proceed with the research on controlled porosity

without assistance. The researchers submitted their

IBM CORPORATION 45
IBM researchers aimed to develop

organic polymer nanofoams with dielectric

constants (k) as low as 2.0, almost

twice as good as that of silicon dioxide,

with its dielectric constant of 3.9.

proposal in ATP's 1992 General Competition and received an award. The ATP award reduced the risk of the

research to a level that IBM management was willing

to provide the necessary internal support to pursue

the research.

The ATP awarded IBM $1.8 million for a three-year,

$5.8 million project to research and develop alternative

methods for producing insulating foams using organic

polymers. These foams were to make use of the insulation

quality of air by creating tiny, nanometer-scale air pockets

in a polymeric structure. IBM researchers aimed to develop organic polymer nanofoams with dielectric constants

(k) as low as 2.0, almost twice as good as that of silicon

dioxide, with its dielectric constant of 3.9.

Some of the work was subcontracted to

researchers at Virginia Polytechnic

Institute, Exfluor Research, and Sandia

National Laboratories.

The Project Team

The project was led by researchers at IBM's Almaden

Research Center in San Jose, California, and facilities in

East Fishkill, New York. Some of the work was subcontracted to researchers at Virginia Polytechnic Institute,

Exfluor Research, and Sandia National Laboratories. The

composition of this team reflected an effort by IBM to harness the expertise of these institutions and to expose

expert chemists to the specific needs of the microelectronics industry.

Researchers Pursue Three Parallel

Research Efforts

Research on low-k dielectric foams was guided by a number of requirements. First, to be usable as insulators,

foams must be produced with a specific horizontal and

vertical thickness. Second, they must be structurally rigid

to withstand the stresses of fabrication. Third, they must

be able to withstand the high temperatures used in the

deposition of metal wiring in the fabrication of integrated

circuits. Aluminum wiring is deposited at temperatures

of more than 450° C.

The researchers pursued three different approaches to the development of low-k dielectric foams for insulation

of microelectronics devices. One approach investigated

closed-cell molecular foams. These foams incorporated

a cage-like molecular structure inside a polymer, forming

tiny pores in which the polymer would encapsulate air or other gaseous molecules. Given the lack of data on this

technology, however, there was concern as to whether

molecular foams with dielectric constants of less than two

could be achieved while still meeting the other requirements for microelectronic applications. Researchers anticipated this approach might need to be combined with one

of the other two processes.

The second approach to constructing polymer foams

built on a method called induced phase separation, which

had been developed by Sandia National Laboratories.

The researchers sought to determine whether this process

could produce extremely thin, heat-resistant foam structures suitable for microelectronic applications.

The third approach investigated the block copolymer

method, considered the most promising by IBM. This

approach combined two different polymers with different

chemical and physical properties to create a structure that

would provide the desired performance as an insulator

while withstanding the heat employed in the process of

fabricating aluminum circuitry.

Achievements

The first approach, which examined closed-cell molecular

foams, was abandoned early in the project. The process

did not produce foams that had low enough dielectric constants and that were uniform in their insulating properties.

The researchers carried out extensive experimentation

with the second approach, which used induced phase

separation. This technique developed extremely good

electrical insulating foams, some of which had dielectric

Using the block copolymer method, IBM

and its colleagues generated foams with

the desired thermal characteristics, as well

as foams with the desired electrical insulation, but could not produce foam that had

both qualities at the desired levels.

46 IBM CORPORATION
PROJECT HIGHLIGHTS

PROJECT:

To develop a method for creating insulators for integrated circuits by controlling porosity, with the goal of enabling multiple generations of ever faster

and more densely integrated circuits.

Duration: 3/01/93 - 2/28/96 ATP Number: 92 01-0103

FUNDING (in thousands):

ATP $1,602 29%

Company 3,940 71%

Total $5,542

ACCOMPLISHMENTS:

Research on low-k dielectric foams demonstrated the potential feasibility

of polymer foams as insulators. Critical requirements and unpromising

approaches were identified. Researchers pursued three approaches in the

attempt to create effective foam insulators, and achieved the following:

presented the new technology at several professional conferences; M identified two methods, involving molecular foams and induced

phase separation, as technically infeasible; H found that one of the methods, involving block copolymers, offers

promise for creating foam insulators suitable for microelectronics use; M published results in technical journal articles in the field of microelectronics, including "Templating Nanoporosity in Thin-Film Dielectric

Insulators," Advanced Materials 1998; and "Nanoporous Polyimides," Advances in Polymer Science 1999, which laid out the state of the art in

the development of block copolymers and the processes used to create

nanofoams; and

stimulated further research on insulators for microelectronics.

COMMERCIALIZATION STATUS:

IBM has continued its efforts to develop block copolymers for use as insulators. Much work, however, remains to develop a viable process for incorporating block-copolymer foams into microprocessors, and commercialization

has not yet been achieved.

OUTLOOK:

The progress achieved by the ATP project, in combination with favorable

market developments, has spurred additional industry efforts to develop

insulating foams, and IBM's research results are guiding much of this effort. One initiative is a new ATP-funded joint venture project led by Dow

Chemical Company and involving IBM, which aims to develop block copolymers from which to create nano-foam insulators with dielectric constants as

low as 1.5. The participation of Dow, a major material supplier, may signal

the creation of a base of suppliers capable of providing high-performance

insulators for microelectronics. Thus, the outlook is positive for the more

recent efforts that have grown out of this project, but not for this project

directly.

Composite Performance Score: No Stars

COMPANY:

IBM Corporation, Almaden Research Center

650 Harry Road

MS K17-801

San Jose, CA 95120-6099

Contact: Dr. Robert D. Miller Phone: (408) 927-1646

Subcontractors: Virginia Polytechnic Institute, Exfluor Research, and Sandia National Laboratories

Researchers identified two metliods,

involving molecular foams and induced phase

separation, as technically infeasible

constants lower than two. The pores in these foams, however, were too large. It was not possible to use them in an

insulating layer thin enough for an integrated circuit of the

required density. Because the size of the air pockets could

not be sufficiently reduced, the team chose not to pursue

this approach further.

Using the block copolymer method, IBM and its colleagues generated foams with the desired thermal

characteristics, as well as foams with the desired electrical

insulation, but could not produce foam that had both

qualities at the desired levels. The researchers did develop significantly better microelectronic insulators, but these

insulators would only be usable in the future if copper

wiring were to be substituted for aluminum, so that fabrication temperatures could be kept below 400° C.

Post-Project Developments

Toward the end of the ATP project, IBM's other work

on the substitution of copper for aluminum indicated that

the move to copper alone would not be enough to speed

up integrated circuits as much as desired. New insulating

materials would, after all, be necessary to meet perform- ance needs. Thus, work on block copolymers continued

at IBM.

Since the end of the ATP project, IBM has made considerable progress in the development of improved block

copolymer foams, but much work remains in the development of a viable process for incorporating these materials

into the fabrication of microprocessors. Indeed, low dielectric constant insulators (k <2.5), including polymer foams,

have yet to be fully developed or incorporated into integrated circuits. Separately, however, IBM's first series of

integrated circuits with copper wiring (CMOS 7S) have

IBM CORPORATION 47
been developed, lowering IC processing temperatures and

increasing the possibility of lower-k polymer dielectrics

being used in future circuits.

In the meantime, IBM also undertook R&D on nonporous, lower-k dielectric materials that may serve in place

of silicon dioxide. For instance, IBM researchers initiated

a study of "toughened organosilicates," which have dielectric constants in the range of 2.6-3.0.

ATP-supported Research Stimulates

Industry-wide R&D Efforts

Greater understanding of low-k dielectric polymer foams

resulting from ATP-funded work at IBM has opened a new window for the study of porous dielectrics (including

but not limited to polymer foams) as alternative insulators.

At the same time, market conditions have become more

favorable. The push toward network computing has also

focused attention on the need to develop advanced materials for the high-end microprocessors required for network

server functions.

As a result, many U.S. corporations, including Lucent

Technologies, Texas Instruments, Motorola, Dow Corning,

BF Goodrich, Allied Signal, Dow, Dow Chemical, and Du

Pont, as well as IBM, are now reviving research into low-k

dielectric materials. A number of key strategic alliances

(Allied Signal-Nanopore, IBM-Siemens-Toshiba, and

IBM-Apple-Motorola) have been formed to pursue R&D

in advanced devices and materials. Low-k dielectric materials research has also been stimulated through industry

consortia such as SEMATECH.' Consequently, U.S. corporations remain major global players in the development

of new low-k dielectric materials for on-chip applications.

The results of IBM's earlier research

were substantial enough to attract. .

Dow Chemical Company.

The results of IBM's earlier research were substantial

enough to attract the interest of a major materials supplier,

Dow Chemical Company. Dow formed a joint venture

involving IBM's Almaden Research Center and Yorktown

Heights facilities, applied to the ATP, and, in October

1998, was awarded ATP funding. The new project aims

to identify and develop polymers to produce nanofoams

with a dielectric constant as low as 1.5, and integrate them

in common IC fabrication. If the Dow-IBM partnership

proves successful, it could help establish a U.S. supplier

base for high-performance insulating materials. ATP

support in developing new ways to produce insulators for

new generations of high-performance microelectronics

has helped to secure an important technical option for the

industry. It represents one of the efforts underway to sustain progress in integrated circuit technology and increase

U.S. producers' share of the global microelectronics market.

' Companies and alliances cited are listed in ATP Final Report, "Low Dielectric Polymers for Microelectronic Applications," No. 70NANB3H1365,

February 12, 1997, p. 68.

48 IBM CORPORATION
^^^^^^^^^^ ADVANCED MATERIALS AND CHEMICALS

MICHIGAN MOLECULAR INSTITUTE (MMI)

Recycling Mixed Plastics

Llike turning swords into plowsiiares, the idea of turning waste plastics into fenceposts, parl< benclies, 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.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * *

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 recycling them

is appealing. A problem with reusing plastics, though, is

that the many kinds do not mix well in recycling processes.

Recycling 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

Wood rots, iron rusts, and stones

weather, but plastic endures.

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, including

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

four-inch-thick panels are fabricated by sandwiching fiberrecycled. The new technology would "compatibilize," or

alter, various plastics so they mix well in recycling. They

could then be formed into pellets with essentially 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 polymers in the commingled plastic-waste

stream to be recycled into commercially useful products.

. . . a curse wlien plastics are

dunnped into landfills.

glass 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 following a fire or other disaster, when

temporary housing must be built quickly. The company

MICHIGAN MOLECULAR INSTITUTE (MMI) 49
PROJECT HIGHLIGHTS

PROJECT:

To develop methods for polymer compatibilization — adding small amounts

of a substance to a blend of different plastics to make them chemically compatible so that 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: 91-01-0088

FUNDING (in thousands):

ATP $1,642 30%

Company 3.808 70%

Total $5,450

ACCOIVIPLISHIVIENTS:

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 recycled into commercially useful products.

Indicators of this accomplishment are that MMI and its collaborators: B published more than 10 papers on the technology in professional journals; H made the technology available to Eagle Plastics Systems to develop

and test materials for the housing construction industry; and B made the technology available through MMI to two ongoing R&D

projects in the automobile industry that focus on recycling plastics

from auto parts such as dashboards, door panels and tail lights.

COIVIiVlERCIALIZATION 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.

Composite Performance Score: -k if

ORGANIZATION:

Michigan Molecular Institute (MMI)

1910 W. St. Andrews Road

Midland, MI 48640-2696

Contact: Conrad F. Balazs Phone: (517) 832-3882 ext. 590

Informal collaborators: University of Florida; Eagle Plastics

Systems; Eastman Kodak Company; Eastman Chemical Company;

Inter Recycling, Inc.

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.

Results of the ATP project

are being used by Eagle Plastics

Systems of Florida to produce

compatibilized plastic panels

for housing parts . . .

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. 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.

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 continuing at the university.

In addition, researchers there have extended the ATP

technology to develop new virgin plastics alloys that are

50 MICHIGAN MOLECULAR INSTITUTE (MMI)
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.

One obstacle to

the speed of commercialization

was a change in ownership . . .

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 information generated by the ATP project has also been made generally

available, via published technical papers, to the plastics

and recycling industries.

ADVANCED MATERIALS AND CHEMICALS

WESTINGHOUSE AND SGS TOOL

Plasma Technology for Production

of Low-cost Diamond Film

niamonds not only are beautiful and valuable as jewelry, they also have a number of unique characteristics

that make them valuable in a range of commercial applications, including optics, acoustics, medicine, electronics,

tooling and hard coatings, abrasives, and ceramics. Economic and

technical constraints, however, limit their use. A low-cost method of

depositing diamond film would open the way to the cost-effective use

of diamond coatings for a wide range of industrial applications.^

r ^

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * *

Diamond Coated Tools Offer More Than Sparkle

High-performance industrial cutting tools, such as drills,

are used for machining demanding materials in the automobile, aerospace, and other industries. For example, in

the aerospace industry, Boeing alone currently uses on the

order of 11 million drill bits per year. There is opportunity

for substantial productivity gains by extending the useful

life of industrial cutting tools. Not only could the replacement costs of tools be reduced, but so too could the

accompanying production downtime that results when

tool replacement is required.

There is opportunity for substantial

productivity gains by extending the useful

life of industrial cutting tools.

As shown in the above figure, the plasma torch consists of a closely

spaced pair of tubular water-cooled electrodes within which an electric

arc discharge is magnetically rotated at extremely high speeds. During

operation, a process gas is injected into the heater through a space

(approximately 1 mm) between the electrodes.

deposition mean that costly process repetition is required

to coat large cutting surfaces.

Diamond coatings would harden the tools and extend

their lives. The feasibility of utilizing diamond-coated

tools, however, depends on the ability to apply diamond

coatings at a lower cost. And, key to making diamond

films cost effective for application to a broad range of

industrial cutting tools is the ability to coat larger areas more quickly at a lower cost per carat than is currently

feasible. Current limitations on the size of the area of

Westinghouse Electric and SGS Tool Company

Propose to Solve the Problem

In 1992, Westinghouse Electric Corporation and SGS Tool

Company teamed up to propose to the ATP a joint-venture

project to develop a low-cost diamond film deposition process. The Westinghouse/SGS team proposed an approach for diamond film deposition based on arc plasma chemical vapor

deposition (CVD) technology. The team's specific focus was diamond film coatings for high-performance rotary tools.

' Status and Applications of Diamond and Diamond-Like Materials: An Emerging Technology, National Material Advisory Board, NMAD-44S, 1990.

WESTINGHOUSE AND SGS TOOL 53
At the time of the project, several competing technologies were used to apply diamond coatings, including

the basic CVD approach proposed for research by the

Westinghouse/SGS team, but only in small areas and at high cost.- Westinghouse researchers proposed to concentrate on the arc plasma chemical vapor deposition

...they saw the potential of reducing

the cost of diamond coating from over

$30 per carat to less than $5 per carat.

(arc plasma CVD) process because they judged it to offer

the best potential for achieving the desired complex of

features: high deposition rate, high quality, and acceptable

(per carat) cost.

In 1992, ATP avv^arded the Westinghouse/SGS team

$2,473 million for a three-year project. Westinghouse and

SGS together contributed $3,275 million, for a total project

budget of $5,748 million.

Westinghouse aimed to increase the power of existing

hot cathode plasma torch technology from 15 kilowatts

(kW) to a power level of 1,000 kW, or 1 megawatt (MW).

Westinghouse/SGS hoped thereby to increase the maximum coating area from roughly 80 to roughly 6,500 square

centimeters, and the production rate from about 1 carat per hour to at least 100 carats per hour. By using this

approach, they saw the potential of reducing the cost of

diamond coating from over $30 per carat to less than $5

per carat. The team also aimed further to cut production

costs and increase production rates through an integrated

gas recycling process, which would reduce the need for

expensive, time-consuming gas replacement.

The team sought to overcome an additional problem:

the targeted high-performance rotary tools are made from

a tungsten-carbide alloy. The material contains traces of

cobalt, and diamonds do not adhere well to cobalt.

The Arc Plasma Chemical Vapor

Deposition Process

In arc plasma CVD, gas that contains carbon passes

through an arc chamber. This electrically charged chamber superheats and ionizes the gas, creating plasma. The

plasma, rich in carbon ions, is projected through a plasma

jet onto the substrate (or surface) to be coated. As the

plasma cools, the carbon atoms deposit on the substrate

as tiny diamond crystals (a particular type of carbon structure), which form a diamond film. This technology is also

referred to as the hot cathode plasma torch process.

Increasing torch power was considered critical to success. It would allow for diamond coating to be deposited

over a larger area with each run of the plasma torch, thereby increasing the production rate. Because the process

would need to be repeated fewer times to coat the same

amount of surface area with diamond film, the cost per

carat of diamond film would be reduced.

Complementary Know-how of Team Members

Westinghouse Electric had experience in the development

and production of high-power, commercial plasma torch

systems. These units are based on cold cathode, nontransferred arc technology. The company had also developed

a 15 kW hot cathode plasma torch that was capable of

extremely low electrode contamination in the plasma

plume. Furthermore, it also enjoyed a leading position

in the development of diamond coatings for optics, as

well as R&D capabilities in the use of CVD for diamond

coating.

Westinghouse Electric had experience in

the development and production of highpower, commercial plasma torch systems.

SGS Tool, a leading supplier of precision cutting

tools, had product research capabilities in materials testing,

product geometry, and coatings. In addition to experience

in developing and producing these tools, SGS brought an

understanding of customer needs. SGS Tool was to provide an automated platform that would manipulate the

tool surfaces to be coated as required by the CVD process.

SGS also would test and evaluate tools featuring the

diamond film coating.

SGS Tool, a leading supplier of precision

cutting tools, had product research

capabilities in materials testing, product

geometry and coatings.

- These include arc plasma chemical vapor deposition (CVD); high-temperature, high-pressure; oxy-acetyiene flame; microwave plasma CVD; hot filament-assisted CVD; and radio frequency (RF) plasma CVD.

54 WESTINGHOUSE AND SGS TOOL
PROJECT HIGHLIGHTS

PROJECT:

To promote the development of an arc plasma CVD process as a low-cost method of depositing diamond film coatings on high-performance rotary

cutting tools, by increasing the power of hot cathode plasma torch technology

from IS to 1000 kilowatts, and developing an integrated gas recycling process

to decrease production costs.

Duration: 1/15/1992- 11/14/1995 ATP Number: 91 01 0261

FUNDING (in tiiousands):

ATP $2,473 43%

Company 3.275 57%

Total $5,748

ACCOIVIPLISHIVIENTS:

Although the Westinghouse/SGA team failed to achieve its overall goal of

developing a cost-effective process for coating high-performance rotary tools

with diamond film, it achieved noteworthy technical advances. Specifically,

the team: I increased the power of the hot cathode plasma torch from

15 kW to 100 kW;

B developed an integrated gas recycling process that eliminated

the need for gas replacement, thus avoiding the need to interrupt

the operation of the plasma torch; M disseminated technical accomplishments in a 1999 technical

publication, as well as through the mobility of researchers who

served on the team; and

set the stage for continued development of the technology by others.

COiVIIVlERCIALIZATION STATUS:

Westinghouse discontinued work on arc plasma CVD for diamond film deposition following the completion of the ATP project, mainly because it was

unable to overcome the problem of adherence of diamond film to the tool

surfaces being studied. Work on the development and application of the

shot cathode plasma torch has continued elsewhere: Westinghouse Plasma

Corporation was formed to acquire the plasma torch technology group from

Westinghouse Electric Corporation. The new company is exploiting the

commercial potential of the hot cathode plasma torch technology in testing

thermal coatings for gas turbines.

OUTLOOK:

The outlook is brighter than might be expected, given the failure of the

initial effort to achieve the overall project goal. The significant increase in

torch power that was achieved in the project has enabled the newly formed

Westinghouse Plasma Corporation to pursue applications of the hot cathode

plasma torch technology to test the performance of alternative thermal coatings in the U.S. Department of Energy's Advanced Turbine Systems (ATS)

program. The plasma torch achievements of the ATP project have greatly

accelerated this effort and reduced its cost. In addition, the integrated gas

recycling process that was developed in the project may prove useful in

other applications.

Composite Performance Score: -k k

COMPANY:

Westinghouse Plasma Corporation

Waltz Mill Site, Plasma Center RO. Box 410 Madison , PA 15663-410

Contact: Dr. S.V. Dighe

Phone: (724) 722-7050

E-mail: dighesv@westinghouse-plasma.com

Subcontractor: University of Minnesota

Researchers from the University of Minnesota

Department of Mechanical Engineering were brought into

the project on a subcontract basis by the Westinghouse/

SGS Tool joint venture for their expertise in plasma torch

modeling and plasma chemistry experimentation. These

researchers were to evaluate alternative carbon gas feedstocks to be used to create the plasma. The researchers

also were to undertake plasma flow modeling to inform

The team failed, however, in its overall goal

to develop a cost-effective process for

coating rotary tools with diamond film.

the design of the plasma torch for application to the

CVD process.

Some Success, Some Failure

The project succeeded in substantially increasing the

power of the hot-cathode plasma torch from 15kW to 100

kW, and this increase in torch power is proving useful.

The project team also successfully developed an integrated gas recycling process that eliminated the need for gas

replacement, one of the problems that drove up deposition

costs by interrupting the operation of the plasma torch.

Information on this process was disseminated by the

researchers in a recent publication, and may prove useful

in other applications.'

The team failed, however, in its overall goal to develop

a cost-effective process for coating rotary tools with dia-

' Martorell, et al., "Gas recycling and flow control for cost reduction of diamond fdms deposited by DC arc-jet," Diamond and Related Material,

(1999), pp. 29-36.

WESTINGHOUSE AND SGS TOOL 55
A management group, including former

employees of the Westinghouse Science

and Technology Center, bought the

plasma torch technology and formed

theWestinghouse Plasma Corporation

(www. westinghouse-plasma.com) to

exploit the commercial potential of the

technology developed in the project.

mond film. The team was unable to develop a means of

getting diamond coating to adhere to the surface of tungsten-carbide tools. It also failed to increase torch power

to the target of 1,000 kW, achieving 100 kW instead.

With these technical failures, the team could not proceed

to scale up the arc plasma CVD process. As a result,

Westinghouse discontinued its work on arc plasma CVD

for diamond film deposition following completion of the

ATP project, and subsequently sold off the divisions in

which the work was carried out.

Technological Advances Carried

Forward by Others

But the story does not end there. A management group,

including former employees of the Westinghouse Science

and Technology Center, bought the plasma torch technology and formed the Westinghouse Plasma Corporation

(wMw.westinghouse-plasma.com) to exploit the commercial potential of the technology developed in the project.

It has continued work on the development and application

of the improved hot cathode plasma torch. The newly

formed company is now applying this hot cathode plasma

torch technology in a U. S. Department of Energy (DOE)

Advanced Turbine Systems (ATS) program to develop

thermal coatings for gas turbines. Hot cathode plasma

torch technology is being used to test the performance

of alternative thermal coatings, which would allow gas

turbines to operate at higher temperatures and higher

efficiencies.

According to a company member who was involved

in the ATP project and the current DOE work, the accomplishments of the ATP project have accelerated the current ATS effort on the order of five years and have resulted in millions of dollars of savings by eliminating the need

for a conventional high pressure test facility."* Hence, the

technology developed in the ATP project is having important consequences for electric power generation—an unplanned, but noteworthy, benefit.

...the technology developed in the ATP

project is having important consequences

for electric power generation—an

unplanned, but noteworthy, benefit.

These developments—the original innovating firms

ending their involvement with the technology and other

organizations picking it up and carrying it forward

demonstrate how the ATP's perspective of success can

differ from a company's. The ATP views a proposing

company as the mechanism by which accelerated application of the newly developed technology by one or more

U.S. companies can be fostered. But that is not the only

route to achieve benefits, as is demonstrated in this case.

Project benefits that accrue to other U.S. organizations

and individuals—spillover benefits—together with benefits that accrue directly to the innovating organizations,

comprise the national benefits that the ATP was established to deliver. This case also demonstrates that technology development and implementation seldom proceed

along a smooth path exactly according to preconceived

plans. Rather, there are often twists and turns, and partial

successes and failures, along the way.

This case demonstrates that technology

development and implementation seldom

proceed along a smooth path...

''Telephone interview with Dr. S.V. Dighe, Nov. 21, 2000.

56 WESTINGHOUSE AND SGS TOOL
ADVANCED TECHNOLOGY PROGRAM

CHAPTER 3

Biotechnology

AASTROM BIOSCIENCES, INC.

A Patient-Friendly Approach to

Human Cell Transplantation

anie of the most important recent developments in cancer treatment has 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.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * * * *

Serious Drawbacks to Existing IVIethods

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

...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.

transplantation. Some cancer patients are not strong

enough to withstand so many extractions. A few are so ill they can't afford to postpone therapy while stem cells are being harvested. Still others suffer significant side effects

(pneumonia, pulmonary embolism, bone marrow inflammation) from the extraction process itself A typical procedure involves eight separate donor visits (one for the

extraction, several for blood testing and other medical

procedures, one for reinfusion of the stem cells), takes

about 16 hours altogether and costs $10,000 to $15,000.

Ex Vivo cell expansion—from lab to the clinic.

Another harvesting method — peripheral blood

progenitor cell (PBPC) collection — is in some ways an improvement over traditional bone marrow harvesting.

PBPC involves injecting 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 hours; requires about 22 needle sticks; and costs around $16,000. It has gained popularity over bone marrow

AASTROM BIOSCIENCES, INC. 59
harvesting in recent years, the company reports. This is

particularly true for collecting cells from cancer patients

themselves, in part because some patients receiving PBPCbased 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 post-transplant recovery. The latter involves hospitalization, antibiotic treatment, infusions of

platelets and red blood cells, and management of adverse

reactions to large-volume cell infusions.

New Approach

Promises Large

Benefits

A cell expansion system

developed by Aastrom

Biosciences could potentially 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. 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.

Injecting Into Processor.

Aastrom 's policy is to disseminate its

findings widely after establishing

protections for its intellectual property.

Aastrom expects cell harvesting via its AastromReplicellTM 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

Another clinical trial, completed in

May 1997, reported excellent findings

for six breast cancer patients. .

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

environment. The cassette uses growth media, oxygen

supplies, and proprietary processes within the bioreactor

to stimulate the marrow to produce its own growth factors. Over 12 days, the cell population expands 5 to 10 times

while 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, 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 outcomes for transplantation using other cell

harvesting procedures.

Favorable results were also reported at the American

Society of Hematology conference in December 1997. A Duke

60 AASTROM BIOSCIENCES, INC.
PROJECT HIGHLIGHTS

PROJECT:

To design and construct a desktop-size device that can expand small samples

of stem cells, a process that would enable reductions in the risk, pain, time

and cost of collecting these 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 tliousands):

ATP $1,220 45%

Company 1.514 55%

Total $2,734

ACCOIVIPLISHIVIENTS:

Aastrora 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:

H 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). M 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 Aastrom-ReplicellTM 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. H Aastrom raised $21 million in new investment capital via an initial public

stock offering in February 1997.

M In November 1997, when Aastrom received the patent listed above,

the company's stock price jumped more than 60 percent in one day. M 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. B 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 underway.

COIVIIVIERCIALIZATION 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 treatments. 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 economic study indicates

this new technological approach could yield significant social benefits just in

treating cancer patients with solid tumors.

Composite Performance Score: * * * *

COIVIPANY:

Aastrom Biosciences, Inc. Dominos Farms, Lobby L

24 Frank Lloyd Wright Drive Ann Arbor, MI 48106

Contact: Alan K. Smith

Phone: (734)930-5555

Number of employees: 4 at project start, 70 at the end of 1997

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.

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 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 ATPfunded technology. News reports about the granting of

two of them in September 1997 were immediately fol- lowed 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 fundamental 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

AASTROM BIOSCIENCES, INC. 61
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.

Other possible applications include

immunotherapy, stem cell gene therapy

and cells for solid tissue repair.

In September 1995, Aastrom entered into a research

and development collaboration with 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 payments 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 con- ducted 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 company's activities. Thus, as Aastrom succeeded in

attracting more private capital, ATP funding 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 1 1 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 AastromReplicellTM System.

Large Potential inserting Cell cassette into Incubator. Benefits

Patients — the main beneficiaries of the new technology — are expected to gain from a less invasive 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 $16,000)

than costs for PBPC apheresis. Furthermore, if the Aastrom

technology substantially decreases the cost of cell transplantation, others who could not have afforded the treat- ment 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 estimates 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 appli62 AASTROM BIOSCIENCES, INC.
cations 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, stem 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.

BIOTECHNOLOG

A M E R S H A M PHARMACIA BIOTECH

(formerly U.S. Biochemical Corporation)

Searching for New Enzymes in

Deep-Sea Microorganisms

JLound F.ound in every living organisnn, enzymes are naturally produced proteins that regulate the rate of chemical reactions occurring in cells. Enzymes are responsible for many thousands of biochemical processes and are vital for

cell growth and the production and use of energy within cells. Enzymes . ^

also play a vital role in industhal applications and microbiology research. COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) By providing the foundation for many of the advances in biotechnology,

enzymes are now revolutionizing health care and agriculture industries.

* * *

Unlocking Genetic Information

The current biotechnology revolution began only a few

decades ago when scientists discovered they could use

certain enzymes to unlock the genetic information contained in a cell's chromosomes. Found in the genes of

DNA strands, a sequence of nucleotides provide cells with instructions on how to build the proteins and amino

acids that are used to carry out biological functions. Study

of this sequence information has already led to major

advances in cloning, forensic identification, and cancer

research. It may also lead to therapeutic treatment and

custom drug design for other diseases currently without

a cure.

Thermally Stable Enzymes Needed

for DNA Amplification

The techniques used to obtain sequencing information

involve a series of processes to tear apart a cell and break

open its components to reveal the underlying genes. This

is done with the help of an enzyme called DNA poly- Deep Sea Vent "Black Smoker."

The enzymes initially used for sequencing and amplification were not thermally

stable and tended to break down when

subjected to the heat necessary to

separate the DNA strands.

merase. DNA polymerase also plays a critical role in

another important genetic process that is used to create

multiple copies of a known sample of DNA. This process,

called amplification, works by placing an isolated sample

of DNA in a solution of bases, primers, and DNA polymerase. The solution is then heated, which causes the

double-stranded DNA to separate into two single strands.

The mixture is then cooled so the primers can bind to

AMERSHAM PHARMACIA BIOTECH 65
pre-established sites along each of the separate DNA

strands. When the mixture is reheated, the DNA poly- merase moves along the single strands of DNA and attaches the bases to form two identical, double strands of DNA.

Repeating the heating and cooling cycle doubles the

strands, and after about 30 cycles, the single fragment of

DNA is sufficiently amplified to provide enough material

for sequencing and further research.

The enzymes initially used for sequencing and amplification were not thermally stable and tended to break

down when subjected to the heat necessary to separate

the DNA strands. As a result, the polymerization process

required constant monitoring to insure that adequate

enzyme amounts were present.

Scientists discovered that microbes inhabiting the hot

springs of Yellowstone Park produce a heat tolerant DNA

polymerase. Although this enzyme, commercially developed as "Taq," was thermally stable for amplification of

DNA, it often proved inaccurate for DNA sequencing.

As the problems with Taq became apparent, the search

for superior enzymes became a major quest.

ATP Supports the Search for a

More Effective Enzyme

In 1993, U.S. Biochemical Corporation (USB) applied

to ATP to study the commercial potential of enzymes

extracted from newly discovered microorganisms found

living in the superheated waters of thermal vents on the

deep ocean floor. Researchers hoped that microorganisms

living in such extreme temperatures could be used to produce an enzyme that was both thermally stable and

more accurate than Taq.

Working together with the University of

IVIaryland's Center of Marine Biotechnology

(COIVIB), Amersham's initial objective was

to collect a large number of exotic hyperthermophiles from the superheated waters

found in thermal vents along the ocean floor

At the time, USB, a small company located in

Cleveland, Ohio, was a recognized leader in the development of DNA sequencing products and had more than 20

years of experience in the biochemical industry. Shortly

after originating this project, USB was purchased by U.K.-

based Amersham International. Amersham pledged full commitment to this project using USB's original plan and

U.S.-based personnel and facilities. The ATP awarded

$1.6 million to USB, and determined that continuation

of the project after the company was purchased by

Amersham International would be in the U.S. economic

interest.

Working together with the University of Maryland's

Center of Marine Biotechnology (COMB), Amersham's

initial objective was to collect a large number of exotic

hyperthermophiles from the superheated waters found in

As the work developed, researchers

found that the DNA polymerases from

deep-sea hyperthermophiles, like Pyrococcus

furiosus, did not outperform Taq.

thermal vents along the ocean floor. Hyperthermophiles

actually thrive in extremely high temperatures (80°-110°C),

high pressures (@33001 bps), and highly caustic solutions

made up of sulfur and other minerals.

The unusual properties that make hyperthermophiles

so appealing also make them extremely difficult and expensive to work with. The researchers designed special equipment and improved methods to allow the tasks of isolating

and purifying the new enzymes to be carried out in an environment that matches their deep-sea habitat. Once the

new enzymes were available, researchers screened them

to determine how their properties compare to Taq.

As the work developed, researchers found that the

DNA polymerases from deep-sea hyperthermophiles, like

Pyrococcus furiosus, did not outperform Taq. Indeed, none of the enzymes they produced was found to be

superior to Taq. As researchers continued their study,

they began to realize that the search for the Holy Grail of

enzymes was not yielding results from the ocean depths.

Scientific Discovery Leads Amersham

To Redirect Research Efforts

Two years after the project began, a discovery published

in the Proceedings of the National Academy of Sciences by

Tabor and Richardson showed how scientists could re- engineer Taq to achieve greater fidelity and accuracy of

sequence data.' By creating a single amino acid change

' S. Tabor and C. Richardson, Proceedings of the National Academy ofSciences, 92, pp. 6339-6343, 1995.

66 AMERSHAM PHARMACIA BIOTECH
PROJECT HIGHLIGHTS

PROJECT:

To study deep-sea microorganisms in an effort to identify, isolate, and characterize tiieir commercially important enzymes for use in life sciences research,

including a suitable enzyme for DNA sequencing, and industrial applicarions.

Duration: 2/15/1994-2/14/1997

ATP Number: 93-01-0113

FUNDING (in thousands):

ATP $1,558 65%

Company 839 35%

Total $2,397

ACCOIVIPLISHIVIENTS:

Recent advances in molecular biology and discoveries of exotic new life

forms have created commercial opportunities in the fields of genomics and enzyme development. The ATP-funded projeect led by Amersham explored

the properties of newly discovered, heat-loving microorganisms with the

objecrive of advancing the scientific knowledge of their genetic makeup

and identifying the commercial potential of their expressed enzymes. Key accomplishments for this project include: B isolation and genomic characterization of hyperthermophiles

obtained from deep-sea thermal vent fluids; H successful partial DNA sequencing of hyperthermophiles using

directed cDNA cloning and other advanced sequencing techniques;

I successful cloning of genes encoding enzymes that have unique applications in life science research and are of significant commercial interest. These enzymes include DNA polymerases used in DNA cycle

sequencing and several modifying enzymes used to improve the

detection, selection and manipulation of DNA sequences; B publication of sequencing results as "A Survey of the Genome of

the Hyperthermophilic Archaeon Pyrococcus Furiosus" in the first volume of Genome Science and Technologi, one of 16 publications which

helped to diffuse knowledge gained through the project; H applied for 7 patents and, by the time of this study, had been

granted 5 patents;

"Thermostable alkaline phosphatase of thermus thermophilus"

(No. 5,633,138: filed 5/30/1995, granted 5/27/97);

"Thermostable DNA polymerase from thermoanaerobacter

thermohydrosulfuricus"

(No. 5,744,312: filed 12/13/1996, granted 4/28/1998);

"Thermostable DNA polymerases"

(No. 5,885,813: filed 5/14/1996, granted 5/23/1999);

"Modified Pol-II type DNA polymerases"

(No. 5,827,716: filed 7/30/1996, granted 10/27/1998);

"Proteins from pyrococcus furiosus"

(No. 5,719,056: filed 4/26/1996, granted 2/17/1998).

CITATIONS BY OTHERS OF PROJECT'S PATENTS:

See Figure 3.1.

COIVIIVIERCIAUZATION STATUS:

From its research on hyperthermophiles, Amersham developed a thermally

stable alkaline phosphatase with applications in the detection of genetic diseases. This product has reached sales of $1.2 million per year. With the

application of newly discovered enzyme reengineering techniques,

Amersham accelerated development of ThermoSequenase, a DNA polymerase that is both thermostable and accurate for DNA sequencing. Sales of ThermoSequenase are $15 million per year and are expected to reach $60

million by 2000. Enzymes to replace chemical catalysts in large-scale industrial applications have yet to be developed.

OUTLOOK:

Amersham completed many of the technical objectives of this project and

accelerated research and development of new enzymes for use in DNA diagnostics. Although it successfully isolated at least one commercially useful enzyme, it did not achieve the ultimate goal of finding a superior hyperthermophilic enzyme. Nevertheless, the project is at least partially responsible

for accelerated development of a thermally stable DNA polymerase,

ThermoSequenase. This enzyme has helped to revolutionize automated DNA cycle sequencing by providing improved accuracy in fluorescent readouts of sequence information. Benefits are accruing from a growing number

of health care and diagnostic applications that rely on accurate and timely

DNA sequence information. The potential application areas are numerous,

including medical diagnostics, gene therapy, drug discovery, human therapeutics, cell cloning, cancer genetics, agricultural biotechnology, forensic identification, toxicology, and environmental monitoring.

The development of competing enzymes is underway and there is substantial market competition in this area. The outlook is promising that the

considerable knowledge gained from this project may yet lead to the devel- opment of new classes of industrial enzymes.

Composite Performance Score: * *

COIVIPANY:

Amersham Pharmacia Biotech

(Formerly U.S. Biochemical Corporation, then Amersham International)

800 Centennial Avenue

Piscataway NJ 08855

Contact: Carl W. Fuller Phone: (732) 457-8000

Informal Collaborator: University of Maryland's Center of Marine Biotechnology

in a polymerase, Tabor and Richardson showed that they

could affect the enzyme's ability to discriminate among

nucleotides, and thereby produce uniform sequence signals. This important discovery meant that the structure

of an enzyme such as Taq could be reengineered to provide the discrimination functions that lead to accurate,

uniform sequence signal intensity. It wasn't the Holy

Grail, but it was very close.

So profound was this discovery that Amersham immediately stopped its effort to screen deep-sea hyperthermophilic enzymes and set about to reproduce the work of

Tabor and Richardson. They soon discovered that these

AMERSHAM PHARMACIA BIOTECH 67
Figure 3.1 Patent Tree for Project Led

by Amersham: Citations by Others of

Amersham Patents

PATENT TREE KEY

Original Patent Second Generation Patent

Third Generation Patent

Fourth Generation Patent

Fifth Generation Patent

\ results could not be replicated with hyperthermophilic

enzymes, but they could reengineer other thermophilic

enzymes to produce properties superior to Taq.

Faster Development of ThermoSequenase

With the knowledge that naturally occurring hyperthermophilic enzymes were not viable alternatives to reengineered thermophilic enzymes, Amersham licensed Tabor

and Richardson's technique and produced ThermoSequenase, a DNA polymerase that is both thermostable

and produces amplified DNA sequences of uniform

signal intensity.' With ATP's support, the development

5885813

Amersham

1999

1998

5719056 I 5744312 I 5827716

Amersham Amersham Amersham

5633138

Amersham

1997

With ATP's support, the development of

ThermoSequenase was advanced by at least

six months. Former director of the Human

Genome Project, Dr. David Smith of the Department of Energy, singles out the timely development of ThermoSequenase in 1995 as being

critical to the Human Genome Project .

of ThermoSequenase was advanced by at least six months.

Former director of the Human Genome Project, Dr. David

Smith of the Department of Energy, singles out the timely

development of ThermoSequenase in 1995 as being critical

to the Human Genome Project, stating, "We would be in

deep trouble if [such technologies] were at a less mature

stage of development."^

ThermoSequenase is now incorporated into Amersham's

leading line of sequencing reagent kits. Currently, these kits

account for sales of over $15 million per year and are expected to reach sales of $60 million in 2000.

Researchers using ThermoSequenase for DNA

sequencing now obtain 10 to 25 percent more information

from each sequencing experiment. The availability of

ThermoSequenase has effectively reduced the cost of

sequencing substantially. It has also enabled greater use

of advanced automated sequencing machines that can

" At the start of the project, Amersham was producing and marketing a DNA polymerase known as Sequenase that could produce accurate, uni- form sequencing. However, this product was not thermally stable and

could not compete with Taq when used in cycle sequencing machines.

' The Seventh International Genome Sequencing and Analysis

Conference, September 1995, available on the Internet < www.olnl.cov/TecUResources/Hulllall Genome/publicat/97pr/evolve.html>.

68 AMERSHAM PHARMACIA BIOTECH
Researchers using ThermoSequenase

for DNA sequencing now obtain 10 to 25

percent more information from eacti

sequencing experiment.

now operate without the need for constant monitoring

of enzyme amounts. Customers of services using

ThermoSequenase benefit from more accurate and more

efficient sequencing. Development of ThermoSequenase

also has stimulated competition in the enzyme market and

has improved the quality of enzymes in biotechnology

applications.

A New Field of Research Bears Fruit

in Unexpected Ways

ATP's cofunded project with Amersham has been praised

as one of the first federally supported efforts to explore

the potential of newly discovered deep-sea life. This has

opened up a new field of research that was completely

unknown two decades ago.*

achieved its goal, but not in the expected way. And, it did

find a useful enzyme in the deep sea, though not the one

of central focus.

...it did find a useful enzyme in tfie deep

sea, tliougii not tlie one of central focus.

Amersham has effectively diffused knowledge gained

through the project by issuing 16 journal publications and

a number of patents. The company filed for seven U.S.

patents, five of which had been granted at the time of this

study. In turn, the development of ThermoSequenase,

and the release of information about it, have led to greater

market competition, and encouraged the development of

competing enzymes.

...as one of the first federally supported

efforts to explore the potential of

newly discovered deep-sea life.

The Amersham researchers developed methods and

applied them to search deep-sea life for an enzyme that

offered a thermally stable and more accurate means of

DNA sequencing. It did not find the hoped-for sequencing enzyme in the deep sea; in fact, during the course of

the project, Amersham was able to conclude that hyperthermophiles were not the answer to the search for a better

polymerase enzyme for DNA sequencing. The company

quickly took a different approach to solving the problem.

The project helped to position Amersham and its academic collaborators so that they could take advantage of new

emerging techniques in enzyme reengineering.

Pioneering use of these techniques led to accelerated

development of ThermoSequenase. Hence, the project

William J. Brode, The Universe Below: Discovering the Secrets of the Deep Sea, Touchstone: Simon & Schuster, 1997, p. 283.

AMERSHAM PHARMACIA BIOTECH 69

APHIOS CORPORATION

(formerly BioEng, Inc.)

Reducing Viral Contamination

in Donated Blood

T.his ATP 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.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.)

No Stars

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,

. . . commercial deployment. .

.

will be much easier if the company

can demonstrate that its technology

can inactivate parvovirus to an

acceptable degree.

be very costly, or damage the blood or plasma. The Aphios

sterilization technology, called critical-fluid 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 blood-related 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

serious 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 compa-

... signed a letter

of intent with the Northeast Region of the

American Red Cross to develop and fieldtest a viral inactivation prototype. .

.

ny is working on a five-step procedure that is expected

to achieve better than 99.99 percent inactivation.

The blood industry has established an extremely high

standard for new technologies. Therefore, commercial

APHIOS CORPORATION 71
PROJECT HIGHLIGHTS

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 tiiousands):

ATP $2,000 67%

Company 1,000 33%

Total $3,000

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 with different levels of effectiveness. The following

achievements indicate technical progress by the company, which: B applied for a patent ("Viral Inactivation Method and Apparatus")

on technology related to the ATP project; H presented two papers at conferences on blood-safety issues; B 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 B submitted a proposal to a consortium of companies to evaluate the viral

inactivation technology 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 development

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 technology

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 oudook at this time is uncertain.

Composite Performance Score: No Stars

COMPANY:

Aphios Corporation

(formerly BioEng, Inc.)

3-E Gill St. Woburn, MA 01801

Contact: Trevor R Castor Phone: (781)932-6933

Number of employees: 3 at project start, 17 at the end of 1997

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 suc- ceeds 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

Without the ATP funds, Aphios

officials say, the company would not

have conducted the project.

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 can be made virus-free with

the Aphios technology. Reducing the spread of viral dis- ease 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 blood-derived

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.

72 APHIOS CORPORATION
BIOTECHNOL

INTEGRA LIFESCIENCES

A New Bioabsorable Polymer:

An Ideal Material for Medical Implants?

J^or F.or mcore than 100 years, orthopedic surgeons have been repairing serious bone fractures by binding the

fractures with screws, pins, and other fixation-type devices. Early on, these devices were often made from

common metals such as iron or steel. Later on, they were made of highly sophisticated metal alloys of titanium,

zirconium, niobium, and tantalum. Still the search continued for materials

that would be more compatible with the human body, and that search led

researchers to consider bioabsorbable polymers.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * * * *

Problems with Existing Materials

While effective in binding the fractured bone, the devices

made of common metal corroded when they were implanted

in the body and released toxins that could cause inflammation, infection, and even life-threatening injury to the

patient. The metal alloys offer major improvements

because they do not corrode when exposed to body fluids

and therefore can be left inside the body for long periods

Many patients with metal alioy implants

must undergo follow-up surgery, with its

associated cost, risk, and trauma, to

remove the implant once the healing

process has occurred.

of time without releasing harmful toxins. They, too, however, have serious drawbacks. Metal alloys are much harder

and stiffer than the bone they replace or support, and can

interfere with the regrowth of the bone.

Many patients with metal alloy implants must undergo follow-up surgery, with its associated cost, risk, and

trauma, to remove the implant once the healing process

has occurred. According to a recent study, the cost of a

second surgery can range from $850 for devices located

in the shoulder to $2,200 for devices located in the knee.

More than 34,000 of these follow-up surgeries are performed in the United States each year, resulting in costs of $30-75 million.'

Bioabsorbable Polymers Offered Promise

and Potentially Dangerous Toxins

Polymers offer great potential as a substitute for alloys for use in orthopedic implant devices. Polymers can be made

to be biocompatible and designed to exhibit more bonelike properties. Their mechanical properties can be strong

enough to withstand weight-bearing applications, yet they

still retain a degree of elasticity not available with metal

alloys. Most important, polymers can be made to be

bioabsorbable, that is, they can be made to dissolve and

slowly be absorbed by the body. Further, the rate of dissolving can be engineered so that it is consistent with the

rate of new bone growth. Under ideal conditions, a bioabsorbable polymer could encourage bone healing while the

body slowly metabolizes it. This eliminates the need for a second surgery that may be required when an unyielding

metal alloy is implanted.

A serious problem existed, however, with available

bioabsorbable polymers—polylactic acid, polyglycolic acid,

and polydioxanone. When they dissolve or degrade inside

the body, they tend to release acids and other toxins that

'"A Framework for Estimating the National Economic Benefits of ATP Funding of Medical Technologies," The Research Triangle Institute Center for Economics Research, Project number 6715-01 FR, NIST OCR 97-737, April 1998, section 3.

INTEGRA LIFESCIENCES 73
are harmful. For sutures and small staple devices this is not a serious problem because the quantity of harmful

substances released is small. But for larger devices, such as weight-bearing screws, the release of harmful products can be significant and can cause inflammation problems, similar to the problems that occurred with the crude metal

devices of the past.

A serious problem existed with available bioabsorbable polymers. When they dissolve or

degrade inside the body they tend to release

acids and other toxins that are harmful.

Over the past two decades, scientists have attempted

to reengineer these polymers to minimize the release of

harmful substances and reduce the resulting inflammation.

This research has had some success but apprehensions

remain over problems of bio-incompatibility. Market

experts suggest that unless a major breakthrough occurs

that solves this problem, the market for bioabsorbable

polymer implants will not fully develop and patients will

have to continue to undergo secondary surgeries with their

associated costs and risks.

ATP Funds Research for an Improved,

Toxin-free Bioabsorbable Polymer

In the early 1990s, Dr. Joachim Kohn, a professor of chemistry at Rutgers University, invented new "pseudopolyamino acids" based on tyrosine, a naturally occurring

amino acid. The polymer's physical properties are similar

to existing, FDA-approved bioabsorbable polymers, but

because it is derived from tyrosine, any acids or toxins it

releases are done so at significantly slower rates.

Several implant device manufacturers showed an early

interest in Dr. Kohn's invention, but none were willing to make a commitment to develop the material because the

technical risk of doing so was very high. Development

of the polymer required the creation of a manufacturing

process that guaranteed the material's purity and uniform

characteristics on an industrial scale. In addition, quantities of the new polymer had to undergo a series of rigorous

tests to show that the material was indeed capable of

being used safely and effectively in implant devices. All of

this had to be accomplished before additional funds would

be committed to run the additional clinical trials mandated

by the FDA approval process.

Integra LifeSciences Corporation, a small biomaterials

company in New Jersey, approached Dr. Kohn with a plan to accelerate the development of this new polymer.

Integra, in research led by Dr. George L. Erode (principal

investigator for the ATP project) and Dr. John Kemnitzer,

would develop a scaleable manufacturing process for the

tyrosine polycarbonate and then perform tests to assess the

new material's potential for use in implant devices. Once

the difficult technical problems were overcome and the

polymer's potential was demonstrated, it was expected

that private investors in the new implant technology could

be attracted.

To offset the high technical risks of this endeavor,

Integra submitted a single-company proposal to the

Advanced Technology Program's 1993 General Competition. Potential economic benefits looked strong, the

research plan solid, and Integra received a $2 million,

three-year award from the ATP that began in January 1994.

Integra Overcomes Technical Obstacles

The first major task of the project was to design and

develop a scaleable process technology that allows for flexible control of several key physical properties during manufacturing and ensures that the polymer can be produced

with a high degree of purity. This work led to the development of the successful "Biphasic Process." Integra filed a patent on this process, and showed that it was capable of

producing commercial quantities of the new polymer.

Having developed the manufacturing process technology,

Integra's next task was to assess the physical properties of

the new material and prepare prototype devices for in vitro

and in vivo testing.

Working with Rutgers University and

New York's Hospital for Joint Diseases,

Integra conducted a series of tests to

study how well the new polymer material

interacts with living cells.

Working with Rutgers University and New York's

Hospital for Joint Diseases, Integra conducted a series of

tests to study how well the new polymer material interacts

with living cells. Toxicity and sensitization studies were

performed to assess such issues as tissue compatibility,

inflammatory response, bone growth, and hard tissue

response. The results confirmed that the new polymer

74 INTEGRA LIFESCIENCES
PROJECT HIGHLIGHTS

PROJECT:

To develop a new polymer material for making implantable surgical devices

such as screws, plates, pins, wedges, and nails for repairing fractured bones;

to design and develop a scaleable process for making it; and to assess the

polymer's suitability as an effective implant material.

Duration: 1/1/94-12/31/96

ATP Number: 93-01-0085

FUNDING (in thousands):

ATP $1,999 81%

Company 467 19%

Total $2,466

ACCOMPLISHIVIENTS:

Development of a new class of bioabsorbable polymers based on tyrosine, a

naturally occurring amino acid, was greatly accelerated. This new polymer can

be used to create implants for surgical devices, such as pins and screws for

repairing fractured bones. Implants made from this polymer do not exhibit the

problems of brittleness, release of toxins on absorption, or the need for surgical removal- all characteristics of implants made with existing materials. The

material and process for making it were brought to the stage where prototype

devices could be produced for testing and demonstration, and commercial

development partners, in collaboration with Integra LifeSciences Corporation,

could file for FDA approval. The project's accomplishments include: H development of a process to produce commercial quantities of tyrosinebased polymers, for which Integra filed a patent in 1997; H synthesis and characterization of bioabsorbable tyrosine polycarbonates

and creation of a variety of prototype fixation devices; H evaluation of the bioabsorbable polymer through studies of toxicity and

sensitization, which indicate that the new polymer is comparable to existing biopolymers in terms of its mechanical and resorbtion properties, and

superior in terms of its biocompatible properties; M diffusion of new technical knowledge through numerous presentations

and 15 publications; I licensing of the technology to two commercial partners; and

H recognition of the technology by the New Jersey Research and Development Council who presented the Thomas Alvin Edison Award

to Dr. Kohn of Rutgers University for project-related research.

COIVIIVIERCIALIZATION STATUS:

On September 18, 1998, Integra announced that it had formed two strategic

commercial alliances for the commercial development of its tyrosine-based

polymer. An alliance with Bionx Corporation is pursuing use of the new poly- mer to develop surgical screws, plates, pins, wedges, and nails to be used for

the fixation or alignment of musculoskeletal fractures. An alliance with

Linvatec, a subsidiary of CONMED Corporation, is pursuing use of the poly- mer to develop arthroscopic fixation devices such as surgical screws, tacks,

and other anchoring devices to attach soft tissue to bone in the knee and

shoulder. The partners have filed with the FDA for approval, and forecast

their first products will be launched shortly after approval.

OUTLOOK:

The tyrosine-based polymer technology is a platform technology with broad

applications in orthopedics (fracture fixation), cartilage and ligament repair, wound care, cardiovascular repair, drug delivery, and other uses. In the near

term, economic benefits are expected to accrue from the development of a wide range of orthopedic fixation devices by Integra and its established commercial partners. The outlook for continued development and commercialization of the technology is excellent.

Composite Performance Score: * * * *

COIVIPANY:

Integra LifeSciences Corporation

105 Morgan Lane

Plainsboro, New Jersey 08536

Contact: George L. Brode, Ph.D. Phone: (800) 762-1574 Number of employees: at project start 32; number of employees at project end: 129

does not emit toxic by-products when it degrades and does

not have an adverse affect on tissue or bone. Other tests evaluated the polymer's resorption properties, i.e., how

the process of bone re-growth interacts with the degrading

polymer. Although the tests were not yet complete at the

time of this study, early results suggest that the new polymer has resorption rates similar to existing FDA-approved

polymers, but does not cause the adverse secondary reactions due to release of harmful materials.

The polymer's mechanical properties were tested and

optimized. The results of these tests indicate that the new

polymer can be used in a number of orthopedic devices,

including weight-bearing devices such as large surgical

screws. Integra is also evaluating various composite materials that could be used with the new polymer to produce

materials with a wide range of physical and mechanical

properties. Additional patent applications in this area are

also planned.

Integra forms alliances with Bionx and Linvatec

With ATP's support, Integra and Dr. Kohn successfully

accelerated the development of this new polymer to the

Integra's new commercial partners have agreed

to undertake and fund the studies necessary

for FDA approval, a commitment neither Bionx

nor Linvatec would have made were it not for

the accomplishments of the ATP project.

INTEGRA LIFESCIENCES 75
point that implant device manufacturers could evaluate

the risk associated with commercialization. Two years after

completion of the project, Integra formed two strategic

commercial alliances committed to the development of

new orthopedic implant devices using the new material.

Integra formed an alliance with Bionx Corporation to develop surgical screws, plates, pins, wedges, and nails

for the fixation and alignment of fractures and for other

musculoskeletal surgical applications. An alliance with

Linvatec, a subsidiary of CONMED Corporation, will

develop smaller screws, tacks, and other arthroscopic fixation devices that will be used to attach soft tissue to bone

in the knee and shoulder. In each case, Integra's new commercial partners have agreed to undertake and fund the

studies necessary for FDA approval, a commitment neither Bionx nor Linvatec would have made were it not for

the accomplishments of the ATP project. Both partners

expressed the expectation that their first products would

be launched soon, but the various filings and approvals

through the Food and Drug Administration take time, and

it is difficult to predict timing with accuracy.

According to Dr. Brode, "without ATP, I don't know

that we could have proceeded. We would be at least five

years or more behind where we are."-

Active Diffusion of Knowledge

In addition to signing licensing deals, Integra has actively

promoted the diffusion of knowledge developed from the

project's technical accomplishments. Company scientists

and other personnel have made numerous industry and

academic presentations on the characteristics of the new

polymer and on the tests of its mechanical properties and

biocompatibility. Two scientists from Integra were invited

to speak at an International Symposium on Polymeric

Drugs and Drug Delivery Systems in Boston, August 1998,

sponsored by the American Chemical Society. Currently,

Dr. Kohn and Integra's other personnel have published

15 peer-reviewed articles dealing with this new polymer,

including those for the American Chemical Society and

the Materials Research Society.

A Platform Technology with Multiple Uses

The new bioabsorbable polymer is a platform technology

with the potential to answer many challenging clinical and

commercial needs. Integra has begun to adapt the technology, which recently won the Thomas Alvin Edison Award,

to new applications including cartilage repair, wound care, cardiovascular repair, and drug delivery.

The new bioabsorbable polymer is a platform

technology with the potential to answer many

challenging clinical and commercial needs.

"Telephone interview with Dr. Brode of Integra, Nov. 27, 2000.

76 INTEGRA LIFESCIENCES
MOLECULAR SIMULATIONS, INC

(Formerly Biosym Technologies, Inc.)

Powerful Software for Designing

New Molecules and Therapeutic Drugs

T.he traditional route to discovering new tlierapeutic drugs and otiier 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.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * * *

Using Mathematics to Find New Drugs

This ATP 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 simuDensity functional theory (DFT) proved

as accurate as other approaches, yet

much less expensive.

lating molecular structures and reactions. The technology

is more efficient than conventional molecule-design techniques, a quality that translates into speedier product

development 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

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.

computing the behavior and properties of molecules.

The suite includes tools for bioinformatics, combinatorial

library optimization, determination of protein structures

MOLECULAR SIMULATIONS, INC. 77
PROJECT HIGHLIGHTS

PROJECT:

To develop density functional theory (DFT), a type of first principles quantum

mechanics, 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 tliousands):

ATP $1,442 44%

Company 1.867 56%

Total $3,309

ACCOIVIPLISHIVIENTS:

MSI successfully demonstrated the applicability of DFT to the study of biochemical systems and developed software that employs DFT 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: H prepared more than 30 technical papers on the ATP-funded technology

for publication in professional journals or presentation at conferences; H implemented a highly accurate way of applying DFT in the company's Turbomole computer software product;

M expanded its physical plant to accommodate larger R&D and

production facilities; M was a finalist for a Computerworld Smithsonian Award, the 1996

Innovator Medal; and

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

of the ATP project in May 1995.

COIVIIVIERCIALIZATION STATUS:

Commercialization is in progress. MSI incorporated the ATP-funded technol- ogy 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 MSFs quantum chemistry workbench software. Benefits from

the ATP-funded 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 incorporated into commercially distributed products that are being used extensively by a relatively small, yet global, community of scientists in

academic, industrial, and governmental laboratories for rational drug design and petrochemical research. It has potential applications in biotechnology,

microelectronics, and industrial fine chemicals research.

Composite Performance Score: -A- -A* 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

The geometry of a heme complex,

optimized by first principles density

functional methods implemented

In the program DMol, 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).

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 software users

benefit from access to several different 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

Turbomole, a computer

software application that

integrates a database of

atomic functions, a modern user-interface, and

mathematical tools like DFT. The computer program calculates tables of molecular characteristics and generates a

three-dimensional structure of the molecule that can be

viewed by molecular graphics.

Another tool upgraded with the new technology

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

Researchers successfully demonstrated

the applicability of DFT to the study of

biochemical systems, the backbone

of drug research . . .

types of computation, potentially reducing the cost of

designing new molecules. The ATP-funded technology

is being used experimentally in petrochemical research,

and it has potential applications in biotechnology, rational

drug design, microelectronics, and industrial fine

chemicals research.

78 MOLECULAR SIMULATIONS, INC.
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 soft-

. . . prepared more than 30 technical

papers . . . for publication . . .

ware can be large relative to what MSI earns through soft- ware 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 developed

under the ATP award — MSI is considering making the

. . . potential applications in biotechnology,

rational drug design, microelectronics, and

industrial fine chemicals research.

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 pharmaceutical and materials

industries, and their customers have all benefited. The

project also facilitated the dissemination of new knowledge, particularly via the many scientific papers that were

published about the ATP-funded technology.

. . . 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.

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 polyolefin products produced when single site catalysts of this type are used to catalyze olefin polymerization.

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 Initial 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

February 1998, the company and Pharmacopeia, Inc.,

announced that Pharmacopeia would acquire MSI. The

acquisition was finalized in June 1998 in a transaction

valued at approximately $140 million.

MOLECULAR SIMULATIONS, INC. 79

THERMO TRILOGY CORPORATION

(original awardee: AgriDyne Teclinologies, Inc.)

Bioengineering of a Safe,

Organic/Chemical Insecticide

Avery 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.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.)

No Stars

Reducing the Risk of Toxic Pesticides

One promising approach to reducing the hazards of pesticides is to use genetically engineered 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 largescale biochemical production. AgriDyne, founded in Utah

Scientific i<nowledge generated by tlie

ATP project . . . is disclosed in two patents

and may be important to tine genetic

engineering of otiier plant extracts.

in the early 1980s as Native Plants, was a small company

that would have been unable to pursue this research without the ATP award.

A Nontoxic, Chrysantliemum-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 chrysanthemum 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

apparently did not have enough management resources to

The company encountered financial

problems that forced it to close in 1995,

just as the project was ending.

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 investment required to commercialize the ATP-funded AgriDyne technology.

Biosys, in turn, declared bankruptcy in 1996. Its

THERMO TRILOGY CORPORATION 81
PROJECT HIGHLIGHTS

PROJECT:

To develop a genetic engineering process for producing pyrethrin, a natural

insecticide from chrysanthemums that is nontoxic to mammals but was available only from Africa in limited, unstable supplies. The technology would

provide a less-costly, stable domestic source of supply.

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

FUNDING (in tliousands):

ATP $1,200 37%

Company 2.012 63%

Total $3,212

ACCOIVIPLISHIVIENTS:

AgriDyne achieved most of its technical goals and received two projectrelated patents: I "Storage Stable Pesticide Compositions Comprising

Azadirachtin and Epoxide" (No. 5,352,697: filed 7/28/1992,

granted 10/4/1994) and B "Chrysanthemyl Diphosphate Synthase, Corresponding Genes and Use in Pyrethrin Synthesis" (No. 5,443,978: filed 6/25/1993, granted

8/22/1995).

CITATIONS BY OTHERS OF PROJECT'S PATENTS: See Figure 3 2.

COIVIIVIERCiALIZATiON STATUS:

No commercial product has yet been produced.

OUTLOOK:

Commercialization is uncertain, owing to the dissolution of AgriDyne,

current market conditions that make the new production approach too

cosdy 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.

Composite Performance Score: No Stars

COIVIPANY:

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

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 knowlAlthough no commercial product has yet

resulted from the ATP-funded technology,

new bioengineering knowledge has.

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.

edge of the scale-up process for the technology (requirements for physical plant investment, 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.

82 THERMO TRILOGY CORPORATION
Figure 3.2 Patent Tree for Project Led by

AgriDyne Technologies, Inc.: Citations by

Others of AgriDyne Patents

PATENT TREE KEY

Original Patent Second Generation Patent

Third Generation Patent

Fourth Generation Patent

Fifth Generation Patent y

1999

1998

1997

1996

1995

5443978

Agridyne

5352697

Agridyne;^,,

1994

THERMO TRILOGY CORPORATION

TISSUE ENGINEERING, INC. (TE)

Prostheses Made of Biomaterials

That Regenerate Body Parts

FJLrom rom Iits beginning, the field of bioengineering has focused on providing the 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, tai<es bioengineering far beyond artificial replacements to a technology that regenerates, rather than replaces,

lost or damaged tissues. Although this claim sounds like science fiction,

it is in fact quite real. And it promises to produce real medical benefits in

the very near future.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * * * *

Technology to Regenerate Lost

or Damaged Body Parts

TE is pioneering a new class of biomaterials called

ADMAT (animal-derived extracellular matrix). The idea

behind the company's ATP project is to use ADMAT

materials in collagen-scaffold prostheses to replace damaged or dysfunctional tissues and organs. The prostheses

are designed to provide templates that mobilize the body's

This ATP project . . . takes

bioengineering far beyond artificial

replacements to a technology that

regenerates, rather than replaces,

lost or damaged tissues.

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

ADMAT materials are derived from the byproducts of

land and marine animals processed for food. The material can be spun into fibers and woven into fabrics using tech-

/

Collagen fiber and braided structures from collagen fiber: (a) single

collagen fiber, (b) 8-ply collagen fiber braid, (c) 64-ply collagen fiber

braid, (d) 512-ply collagen fiber braid.

niques borrowed from the textile industry, or it can be

formed into foams, sheets, and films. ADMAT can be used

to enhance collagen scaffolds for vascular 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 preserving the desired characteristics of the extracellular matrix. The company developed new materials for hosting the matrix and a process

for adding the matrix to collagen fibers in the course

of spinning.

TISSUE ENGINEERING, INC. (TE) 85
PROJECT HIGHLIGHTS

PROJECT:

To develop techniques and procedures for processing tissue, extracting and

storing collagen, and spinning and weaving collagen fibers into fabrics and

other forms suitable for human prostheses that could induce the body's own

cells to rebuild lost tissue while gradually replacing the prosthesis.

Duration: 3/1/1993 — 2/28/1996 ATP Number: 92 Ol 0133

FUNDING (in tliousands):

ATP $1,999 48%

Company 2.128 52%

Total K127

ACCOIVIPLISHIVIENTS:

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 Method 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); U applied for three other patents related to the technology;

M made several presentations at conferences and workshops; and

B 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.

CITATIONS BY OTHERS OF PROJECT'S PATENTS: See Figure 3.3.

COIMMERCIALIZATION 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.

Composite Performance Score: ir ir ir

COMPANY:

Tissue Engineering, Inc. (TE)

451 D St., Suite 807

Boston, MA 02210

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

Number of Employees: l at project start, 18 at the end of 1997

The demand for products the company plans to offer

clearly exists. The lag time, however, between technology

conception and market availability — particularly for medical treatments — is long. Tissue-engineered products face

clinical trials and other regulatory hurdles, in addition to

technical and market-introduction barriers. The company

is making good progress in navigating these barriers in

accord with its technical and business plans.

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 wound-healing products.

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.

TE has placed periodontal

prosthesis prototypes with potential

customers for testing.

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 important role in bringing

these benefits to society, 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

86 TISSUE ENGINEERING, INC. (TE)
Figure 3.3 Patent Tree for Project Led by

Tissue Engineering, inc.: Citations by

Otiiers of Tissue Engineering, Inc. Patents

PATENT TREE KEY

Original Patent 4^ Second Generation Patent

Third Generation Patent

Fourth Generation Patent

Collagen fiber decorated with ADMAT

microparticulates

via ATP-funded

patented process.

Institute estimated that TE's ADMAT technology could

be expected to genetate about $33 billion (in present

value dollars) in net benefits for society 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

. . . formed a venture with Wright Medical

Technology for commercialization of

orthopedic applications.

in use. The study incorporated estimated benefits from

quality-of-life improvements, using a "quality-adjustedlife-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

5562946

Tissue Eng.

1996

V J

TISSUE ENGINEERING, INC. (TE) 87

ADVANCED TECHNOLOGY PROGRAM

CHAPTER 4

Electronics,

Computer Hardware

& Communications

ELECTRONICS/COMPUTER HARDWARE/COMMUNICATIONS

ACCUWAVE CORPORATION

Expanding the Number of

Light Signals in an Optical Fiber

aver the 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

. . . multiwavelength light enters one

end of the crystal and encounters a

series of holographic gratings

. . . that separate the light signals

of different wavelengths.

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, separating 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.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.)

No Stars

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 of the

crystal and encounters a series of holographic 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 funding, Accuwave extended

its technology to the infrared wavelengths used for longdistance telecommunications, and designed a prototype

WDM system.

. . another company beat it to market

with a competing system operating in

the same infrared wavelengths.

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).

ACCUWAVE CORPORATION 91
PROJECT HIGHLIGHTS

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 69%

Company 898 31%

Total $2,885

ACCOIVIPLISHIVIENTS:

Accuwave developed a process for producing photorefractive materials

suitable for fiber optics telecommunications applications. The company also: H received two patents for technologies related to the ATP project:

"Photorefractive Systems and Methods (Divisional)"

(No. 5,684,611: filed 6/6/1995, granted 11/4/1997) and

"Wavelength Stabilized Laser Sources

Using Feedback From Volume Holograms"

(No. 5,691,989: filed 9/14/1993, granted 11/25/1997); M applied for two additional patents for technologies related to the ATP project; H completed pilot production of wavelength division multiplexing (WDM)

components designed for incorporation into equipment manufactured

by other companies, and introduced the components in 1996; I signed a purchase agreement with a major telecommunications equipment manufacturer;

raised $4 million from venture capitalists and other investors since 1990; and

H built a plant and ramped up volume production in 1998.

CITATIONS BY OTHERS OF PROJECT'S PATENTS: See Figure 4.1.

COMIVIERCIALIZATION 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 further

on the outlook.

Composite Performance Score: No Stars COMPANY:

Accuwave Corporation

1651 19th St.

Santa Monica, CA 90404

Contact: Neven Karlovac Number of Employees: 5 at project start, 16 at the end of 1997

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 oper-

. . . launched several component products

based on the ATP-funded technology.

ating 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 package than the products

offered by competitors.

Although 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 over, with the

count possibly reaching as many as 80 signals per fiber.

92 ACCUWAVE CORPORATION
Figure 4.1 Patent Tree for Project Led by

Accuwave Corporation: Citations by Others

of Accuwave Corporation Patents

PATENT TREE KEY

Original Patent Second Generation Patent

Third Generation Patent

Fourth Generation Patent

Rfth Generation Patent

1998

5684611

Accuwave 1997

In addition to applications in the bulk-signaltransmission 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 TV market, particularly for security

. . . in late 1998 it was learned that the

company had ceased operations and was

in the process of declaring bankruptcy.

uses. The company was interested in pursuing 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.

ACCUWAVE CORPORATION 93
iiii
AMERICAN DISPLAY CONSORTIUM

A Technology Boost for U.S.

Manufacturers of Flat Panel Displays

r

fonsumers are always hungry for the latest and greatest, especially in computers and televisions. Demand is

high for the development of larger, higher-resolution displays. Flat-panel displays offer larger viewing areas, higher

resolution, lighter weight, and require less space than traditional cathode-ray tube (CRT) technology. Applications

range from laptop computer screens to high-definition television to signs. As

new digital HDTV is adopted in the United States, flat-panel displays are

likely to increase in economic importance. The 1998 global market for flatpanel displays totaled $11.8 billion, and is growing approximately 9 percent per year, with 12 percent expected by 2003.^

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.)

Common Problems Impeding U.S. Producers

A flat panel display (FPD) consists of two glass plates with an electro-optical material compressed between them that

responds to an electrical signal by emitting light or modulating backlighting. On the glass plates are rows and

columns of electrical conductors that form a grid pattern.

It is the intersection of these rows and columns that define

picture elements, called pixels. The modulation of light

by each pixel creates the images on the screen. There are three broad types of commercially available FPDs: liquid

crystal displays, electroluminescent (EL) displays, and

plasma display panels.

made. Because of the complexity and size of flat panel

displays, flaws such as "opens" (spaces where there should

be wires) or "shorts" (wires where there should be spaces)

are quite common. According to some estimates, manual

inspections and repairs have accounted for as much as 40

percent of the total cost of flat panel production. By finding solutions to problems causing defects, U.S. flat-panel

display companies saw an opportunity to fight their way

into the Japanese-dominated world market.

A problem confronting all of the producers of

FPDs has been the cost of undetected defects

on a panel, which can result in costly repairs,

or scrap if repairs cannot be made.

...U.S. flat-panel display companies saw

an opportunity to fight their way into the

Japanese-dominated world market.

A problem confronting all of the producers of FPDs

has been the cost of undetected defects on a panel, which

can result in costly repairs, or scrap if repairs cannot be

An Industry-led Collaborative Research Initiative

In the early 1990s, Japanese producers emerged as market

leaders in flat panel display technologies. By 1993, Japan

held 92 percent of the world market share for liquid crystal

displays, 68 percent for plasma displays, and 47 percent

for electroluminescent (EL) displays.

In an attempt to change this unfavorable world market

' SRI Consulting, Tech Monitoring, Flat-Panel Displays, 1999.

"Kala Krishna and Marie Thursby, Whither Flat Panel Displays? 'H'QEK Working Paper 5415, January 1996, cited in Albert Link, Economic Analysis of the Advanced Manufacturing Technology for Flat Panel Display Joint Venture at Project End, Draft Report to ATP, April 1 997: 23 (unpublished).

AMERICAN DISPLAY CONSORTIUM 95
PROJECT HIGHLIGHTS

PROJECT:

To improve the ability of U.S. firms to manufacture flat panel displays

efficiently, by developing equipment to inspect and repair displays automatically, and by developing improved methods of mounting integrated circuits

to increase resolution.

Duration: 8/15/1991 - 8/14/1996 ATP Number: 90-01-0060

FUNDING (in thousands):

ATP $7,306 49%

Company 7.604 51%

Total $14,910

ACCOMPLiSHIVIENTS:

A group of U.S. producers of flat panel displays cooperated to address com- mon problems that were plaguing the industry. They made a number of

advances that should improve their ability to compete in world markets,

currently dominated by foreign producers. Specifically, they: I developed a process of tape automated bonding (TAB), a technique

for mounting integrated circuits on a display surface, for which a

patent was received by Planar;

introduced the TAB process into commercial production;

U developed prototype equipment for automatically inspecting flat

panel displays for flaws and automatically repairing these flaws;

explored other approaches for the fabrication of driver circuitry for

displays, including flip-chip-on-glass and Silicon-on-Glass technologies;

M presented papers at industry meetings; and M filed a patent application which was granted:

"Die Bonding Connector and Method"

(No. 5,426,266: filed 11/8/1993, granted 6/20/1995).

CITATIONS BY OTHERS OF PROJECT'S PATENTS: See Figure 4.2.

COIVIIVIERCIALIZATION STATUS:

The tape automated bonding process developed by Planar has been intro- duced into commercial production.

OUTLOOK:

Project accomplishments, particularly the work on TAB which enabled

substantial improvements in the resolution level of flat panel displays, have

increased the competitiveness of U.S. FPD producers. Yet the challenges

faced by U.S. producers are large, and the results of the project alone appear

insufficient to meet those challenges. The general outlook for the U.S.

industry remains uncertain at this time.'

Composite Performance Score: -ACOIVIPANIES:

American Display Consortium

6975 Wales Rd. Nonhwood,OH 43169

Contact: Dr. Peter Friedman

Phone: (419)666-1024

Joint Venture IVIembers at Project End: Photonics Imaging, Inc.,

Electro-Plasma, Inc., Kent Display, Inc., Westinghouse Norden Systems,

Inc., and Planar Systems, Inc.

Subcontractors: Florod and Micron Corporation

Collaborator: University of Michigan

Spin-off Company: Ward Synthesis.

situation, a group of U.S. flat panel display manufacturers,

organized as the Advanced Display Manufacturers of

America Research Consortium (ADMARC), applied to the Advanced Technology Program for research funding.

In 1991, ADMARC companies received an ATP jointventure avv^ard of $7.3 million for a five-year project to develop technology that would improve the ability of U.S.

firms to manufacture flat panel displays efficiently and

vs^ith improved performance and quality. Consortium companies matched the ATP award with $7.6 million, for total

project funding of $14.9 million. After receiving funding

from ATP, the consortium changed its name to the

American Display Consortium (ADC).''

Initially, the American Display Consortium was made

up of three members: Photonics, Planar Systems, and

Optical Imaging Systems (OIS). OIS was later bought

by another firm and left the consortium. Following the

departure of OIS, several additional companies joined

the consortium, including Electro-Plasma, Inc., Northrop

Grumman, Norden Systems, Plasmaco, Inc., and Kent

Display Systems. By the end of the project, the ADC had

grown to include 14 member companies, but Photonics

and Planar remained the leaders of the ATP project.

Approximately half of the participating companies

shared the costs of the tasks that were undertaken. All of

the companies had access to periodic reviews of technical

progress as well as the intellectual property created by the

project. But those companies that did not participate in

sharing the project's costs were not allowed to help set

the research agenda for the project.

' Substantial additional technical assistance to the industry has been provided by DARPA and that assistance may further improve the outlook for U.S.

producers.

"* This is not the same organization as the U.S. Display Consortium, which later formed and received money from the Defense Advanced Research

Projects Agency (DARPA) to research flat panel displays. ADC later became a member of the U.S. Display Consortium.

96 AMERICAN DISPLAY CONSORTIUM
A Shared Motivation for Improvement Among

Head-to-Head Competitors

At the outset of the project, all three of the participating

companies were struggling financially, and were preoccupied with their individual business and production problems. Although the participating companies' businesses were based on different technologies (i.e., liquid crystal,

electroluminescent, and plasma displays), the companies

shared common problems and goals. They all wanted to be able to increase the density of driver circuitry and interconnections in order to improve display resolution, and

they wanted automated testing to decrease production

costs. By improving quality and lowering costs, they could

better compete with foreign manufacturers and regain

market share. At the same time, they were among the

community of U.S. flat-panel display producers who were

also competing among themselves for market share.

The resulting project structure was a horizontal joint

venture of competitors who were all operating in a difficult

market situation. Maintaining a climate of openness, with

a high degree of sharing of information appeared to be

much more challenging to achieve in this joint venture

project than in many of the others that ATP has funded.

It is perhaps not surprising that each member tended to have its own area of focus and major issues of concern, and

that the project tasks were primarily divided along individual company lines. This division of research is in contrast

to the cross-company research teams, used, for example,

in the Printed Wiring Board Joint Venture led bt NCMS

described in this chapter.

Teclinology for Automatic Inspection and Repair

The consortium took several major approaches and areas of focus: Photonics sought to automate systems for

inspection and repair on the manufacturing line in order

to decrease the costs associated with quality assurance. The company sought to develop an automated system that

could inspect displays quickly and reliably, allowing engi- neers to modify the production equipment before more

flawed displays were produced. An additional goal was

to develop an automatic repair system that could add or remove conductive material on a display to repair opens or

shorts. Both steps toward automatic repair could decrease

production costs, allowing U.S. companies to compete

more effectively with their foreign competitors.

Photonics worked with Florod, a subcontractor, to develop prototype automatic inspection equipment.

The first resulting prototype, AIM-1, had substantial performance problems. To fix these problems, Photonics

worked with consultants from the University of Michigan

to design the second prototype, AIM-2. Photonics then

issued a contract to a spin-off company. Ward Synthesis,

to construct the new device. The AIM-2 can successfully

detect a number of different defects on various types of

flat panel displays.

Photonics also developed a prototype automatic repair

station with the help of another subcontractor. Micron

Corporation, who delivered the prototype to Photonics in

December 1995. Demonstrations have shown that the

repair equipment can successfully repair defects in active

and passive liquid crystal displays.

Technology for Improved Resolution

The other goal of the project was to improve the degree

of resolution, a key performance criterion for FPDs. The

higher the resolution of images on the screen the better,

and higher resolution requires more pixels. Pixels are controlled by integrated circuits (ICs), or driver chips, mounted on the glass. More pixels require additional driver

chips, each of which must be connected with the display.

More pixels and more driver chips present other manufacturing challenges that the consortium sought to address.

To increase resolution for a given screen size requires

increasing the density of circuit integration and the density

of connections between chips and display. To achieve a higher level of integration, Optical Imaging Systems (OIS)

sought to stack and interconnect memory and/or logic elements on the driver chips that control the pixels. It did

this by using polysilicon-on-glass (PSOG) transistors.

These thin-film transistors serve as electrical switches on many large-area displays, and are especially important to the manufacturers of active matrix LCD.

The PSOG task was redefined after OIS was bought

by another company and could not pursue its part of the

research on the project. The consortium's new effort,

called the silicon-on-glass (SOG) task, directed by

Photonics, was intended to investigate a version of this

technology that would be applicable to driver chips for all FPD technologies, not just active matrix liquid crystal displays (AMLCDs). A prototype was developed using SOG

technology, but testing found that some of the chips could

not handle high voltages. As a result, the SOG task was

terminated in the project. Reportedly, several large semiconductor firms subsequently undertook further development of the silicon-on-glass approach to increasing integration of driver chips."

' Link, 1997, p. 25. Substantial additional technical assistance to the industry has been provided by DARPA and that assistance may further improve the outlook for U.S. producers. 25.

AMERICAN DISPLAY CONSORTIUM 97
Driver circuitry for active-matrix LCDs (AMLCDs) is

fabricated directly on the display area itself with the individual pixels that the drivers control, while driver chips for

plasma and electro-luminescent displays, as well as some

driver chips for AMLCDs, are mounted on the edge of

the display area. Planar explored another approach to fabricating driver

circuitry on the edges of displays. Planar sought to develop

flip-chip-on-glass (FCOG) technology, which would allow

for the ICs controlling pixels to be fabricated directly onto

the glass. Planar demonstrated the technical feasibility of

FCOG technology. The cost of the technology, however,

led company participants to conclude that the technology was "not economical at this time." The FCOG task was

therefore concluded ahead of schedule, and instead. Planar

began working on a technology called tape automated

bonding (TAB).

TAB was and is the primary approach to attaching

driver chips to the edges of flat panel displays. This technology works by mounting integrated circuits on tape

and then attaching this tape to the display glass. Planar

researched and successfully developed techniques to

attach adhesive to the display glass, align the tape on the

glass, and then bond the tape to the glass. Planar subsequently introduced the TAB process into commercial

production.

Tape Automated Bonding (TAB) Technology:

a Central Achievement

In the opinion of those closely associated with the project,

its central achievement was the improvement of the TAB

technology, the primary approach for mounting driver circuitry on the edges of flat panel displays. Planar's work on

the TAB technology resulted in the capability to triple the

resolution of flat panel displays.'' Not only does the manufacturer benefit, but so do the customers of improved

displays. And, the ability to improve resolution will make

these U.S. companies more competitive internationally.

...the TAB technology resulted in

the capability to triple the

resolution of flat panel displays.

Project-related advancements in TAB were disclosed

in a patent issued to Planar in June 1995. The advancements in technical knowledge were also disseminated in

a series of presentations at professional gatherings: at the

Symposium on Electronic Imaging—Science and Technology; at the annual meeting of the Society of Imaging

Science and Technology; and at the Electronics Display

Forum 95.

" Chris

98

King, phone interview, May 13, 1999.

AMERICAN DISPLAY CONSORTIUM
Figure 4.2 Patent Tree for Project Led by

American Display Consortium: Citations by

Others of Planar Systems Patents

PATENT TREE KEY

Original Patent Second Generation Patent

Tliird Generation Patent

Fourtli Generation Patent

Flftii Generation Patent V y

1999

1998

1997

1996

5426266

Planar Systems

1995

ELECTRONICS/COMPUTER HARDWARE/COMMUNICATIONS

ASTROPOWER, INC.

Manufacturing Technology for

High-Performance Optoelectronic Devices

aOptoelectronic devices — from ligtit-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. f

^ COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * *

LEDs That are Four Times as Bright

Although LEDs are used in many appHcations 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.

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

. . . made significant advances in

understanding growtii processes for

compound semiconductor materials . .

that promotes the growth of the epitaxial layer laterally

much faster than vertically from the substrate. Company

researchers made significant advances in understanding

growth processes for compound semiconductor materials

A large area solar grade silicon sheet emerging from a silicon growth

reactor which incorporates new ATP-funded technology.

and in applying LPE to lateral growth over buried reflectors and other components. The technology can be used

for volume production of low-cost compound semiconductor devices — those made from a compound of elements,

such as gallium arsenide, rather than a single element.

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

ASTROPOWER, INC. 101
PROJECT HIGHLIGHTS

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 tliousands):

ATP $1,423 47%

Company 1,580 53%

Total $3,003

ACCOIVIPLISHIVIENTS:

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: B received four patents related to the ATP project technology; "ColumnarGrained 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); H 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 reflectors), achieving a fourfold increase in brightness;

H completed scale-up of liquid-phase epitaxy (LPE)-growth technology to a

high-throughput, production-scale process; B significantly shortened production scale-up times for specific products,

compared with previous manufacturing processes; H constructed a demonstration production facility to implement the

technology; and U conducted an initial public offering of stock in February 1998, raising

$16.7 million.

CITATIONS BY OTHERS OF PROJECT'S PATENTS: See Figure 4 3

COIVIIVIERCIALIZATION 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 introduction are combustion

sensors based on gallium-phosphorus compounds, and avalanche photodiodes

and detectors based on indium-gallium-arsenic-antimony compounds.

Composite Performance Score: -k

COIVIPANY:

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

already significantly shortened production scale-up times

for currently fabricated products, as well as for potential

products under consideration by customers.

Market 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 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

. . . succeeded in designing and

assembling a modular prototype

production growth system . . .

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-FilmTM solar

cell. Silicon-FilmTM is a continuous production process

to manufacture crystalline silicon sheets and layers.

102 ASTROPOWER, INC.
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 possi-

. . . 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.

ble 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.

An initial goal, to produce high volumes of

red LEDs, has been stymied by market

developments . . . red LEDs have become

a commodity product.

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. Two 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 photodiodes 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.

Company Growtli

At the beginning of the ATP project in 1992, AstroPower

had annual product sales of $1 million. By 1997, sales had

grown to $16 million. And in February 1998, AstroPower

successfully conducted an initial public offering of stock,

raising $16.7 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 technology across all of

its product lines, its application of manufacturing automa-

. . . had it not conducted the ATP-funded

project, its growth experience . . . would have been set back by three years.

tion 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.

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 development 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.

ASTROPOWER, INC. 103
r

PATENT TREE KEY

Original Patent Second Generation Patent

Third Generation Patent

^ic Fourth Generation Patent

Rfth Generation Patent

Figure 4.3 Patent Tree for Project Led by AstroPower, Inc.

Citations by Otiiers of AstroPower, Inc. Patents

104 ASTROPOWER, INC.
Cross-sectional

photomicrograph of a

light emitting diode

showing device active

layers and buried

mirror overgrowth.

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.

ELECTRONICS/COMPUTER HARDWARE/COMMUNICATIONS

CALIMETRICS, INC.

Pit Depth Modulation: Multiplying

the Capacity and Speed of CDs and DVDs

.n 1983, the compact disc (CD) became the hottest product on the consumer electronics market with the ability

to encode over an hour of high-quality audio on each of the silvery discs. A few years later, computer users were

equally enthusiastic when CD-ROMs, each with the data capacity to hold entire encyclopedias or the complete

works of Shakespeare, first appeared on store shelves. In 1997, the digital video disc (DVDy became the

latest in optical storage disc trends by offering a larger storage capacity

and faster reading speed than prior CD formats. In this rapidly changing

digital revolution, however, the need for the still larger storage in the

next generation disc has already become apparent.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * * *

Ever-Increasing Demands for More Storage Capacity

Demand for DVDs continues to grow; DVD system sales

are estimated to increase from 95 million units sold in

1998 to over 175 million units in 2001.' This popularity is

not surprising given that a DVD can hold enough data (up

to 8.5 gigabytes on a dual layer disc) to play back an entire

motion picture on a standard television with far greater

clarity than a standard VHS videotape.^

A single-sided DVD, however, does not have sufficient capacity to store the same movie at the much greater

level of resolution required for high-definition television

(HDTV)—which requires 15-20 gigabytes (GB) per disc.

The shortfall of storage capacity for HDTV applications

represents a large challenge. The recent proliferation of

digital technology for other uses, such as audio recordings

and computer storage, has created a voracious worldwide

appetite for ways to store huge amounts of data.

The fast-moving computer and consumer electronics

sectors are highly competitive, promoting widespread

demand for digital media and driving the need for more

storage capacity. Digital storage is vitally important for

delivering telecommunication and entertainment services,

as well as computer programs to households.'*

Given the high stakes, competition among datastorage companies in the United States, Japan, Europe,

Australia, and elsewhere is intense. Hundreds of millions

of dollars have been spent researching a variety of methods

to increase data storage speed and capacity.

Turtle Ears Lead to Proposed Method

During his doctoral studies at the University of California at

Berkeley, from 1988-1993, Mike O'Neill was working on

the development of a laser feedback microscope to study

the inner ear function in turtles (a turtle's inner ear is very

similar to a human's). During this time, O'Neill met Terry

Wong, another graduate student interested in the laser feedback microscope. Working in the same lab, the two began

to see a very different potential application of the laser technology they were developing: to increase data storage.

The following year, O'Neill and Wong, along with

Tom Burke, a former McKinsey & Company consultant,

founded Calimetrics. The company's mission was to develop their "pit depth modulation" (PDM) technology

to increase the storage capacity and access speed of CDs.

' Since the introduction of computer DVD-ROMs, DVD has become "Digital Versatile Disc."

" Source: IDC, Strategic Marketing Decisions, Disc/Trend, Wall Street Journal, <www.calimetrics.com>.

^ The 8.5 GB on a dual layer DVD disc is doubled to 17GB for a dual layer double-sided DVD disc. Although PDM increases capacities to the range needed for HDTV quality content, 17 GB can handle this. ML reduces the cost of media manufacture as compared to the DVD solution,

and eliminates the need of turning the disc over in the middle of the movie.

"Optical Storage Technologies," TechMonitoring, 1998 (SRI Consulting).

CALIMETRICS, INC. 107
PROJECT HIGHLIGHTS

PROJECT:

To develop pit depth modulation (PDM) technology to triple the storage

capacity and reading speeds of existing CDs and DVDs by using multilevel

pit depths rather than binary pit depths.

Duration: 2/1/95 -3/31/97 ATP Number: 94-01-0115

FUNDING (in thousands):

ATP $1,808 66%

Company 945 34%

Total $2,753

ACCOMPLISHMENTS:

Calimetrics developed data storage enhancement technologies using patented pit depth modulation (PDM) technology and is poised for commercial

development. The company: M developed microchips for existing laser CD readers that can evaluate

the intensity of the laser light reflected from the disc, making PDM

compatible with existing products on the market; M developed integrated circuits that can be used in current CD and DVD

manufacturing systems to make drives that can read at multiple depths

and which add very little to the cost of disc mastering while producing

the dramatically improved storage benefits of PDM;

H improved the precise control of the laser depth for the mastering

process, by reducing power fluctuations and improving the electronics

that turn the beam on and off; M investigated different materials to sharpen the differences in the

pit depths (but did not use them due to market resistance); M developed new decoding software to interpret optically-stored

data and correct errors; I presented a paper on PDM at the 1997 Optical Data Storage

Conference and published articles in multiple periodicals; M received two patents for project research:

"Optical disc reader for reading multiple levels of pits on an

optical disc"

(No. 5,854,779: filed 1/5/1996, 12/29/1998)

"Method and apparatus for providing equalization for the

reading of marks on optical data storage media"

(No. 5,818,806: filed 5/6/1997, granted 10/6/1998); M licensed suite of optical storage technologies to Texas Instruments

in August 1999;

When first starting out, O'Neill and Wong had confidence in PDM's technological potential, but the fledgling

company did not have the means for sustained research.

With a kick-start of $25,000 from family and friends, the

company sought funding from venture capitalists and

other private sources. All, however, rejected investment in

PDM development, deeming the technical and market

risk too high. The company faced the classic catch-22 situation of innovation financing: funding was not available

because the technology was unproven, yet it could only be

proven if substantial financial resources were brought to bear on the problem.

M finalized $12 million in venture capital funding from Walden

International Investment Group, JAFCO America Ventures, and others, and two industry veterans, William J. Schroeder (CEO of Diamond

Multimedia Systems) and James A. Malcolm (founder and former CEO

of Accumap Corporation) joined the Calimetrics Board of Directors; and H formed strategic agreements with TDK Electronics and other industry

leaders for joint development of new products that implement

Calimetrics' advanced multilevel optical storage capabilities.

CITATIONS BY OTHERS OF PROJECT'S PATENTS: See Figure 44

COMMERCIALIZATION STATUS:

Calimetrics has licensed its technology for commercial use and formed

alliances with TDK and other companies for new product development.

OUTLOOK:

Optical data storage markets are expanding. Annual shipments of DVD sys- tems woridwide are expected to increase from 95 million units in 1998 to 175

million units by the end of 2001. Calimetrics is positioned to take advantage

of this expanding market through strategic alliances with leading disc drive,

disc media, and integrated circuit manufacturers. The company's alliances

with Texas Instruments and TDK Electronics for joint new product develop- ment are important steps towards commercializing the new storage capabilities. At the same time, the technology has disseminated to others through

publications and patents. The advantages of larger storage capacity and faster read speeds offered by PDM technology will be available to those in the data storage industry for

a relatively low incremental cost. Calimetrics has designed this technology to

be both backward and forward compatible. It will work with existing CD

and DVD systems, while also supporting the latest (and anticipated) laser

technologies. With commercialization plans for the near future and strategic

partnerships established, Calimetrics' PDM technology appears poised to make a strong impact in the expanding optical data storage market.

Composite Performance Score: * * *

COMPANY:

Calimetrics, Inc.

815 Atlantic Avenue

Suit 105 Alameda, CA 94501-2274

Contact: Tom Burke Phone: (510) 864-4100 Number of Employees: 3 at project start; lO at project

end; 35 as of January 2000

In 1994, Calimetrics became aware of ATP, submitted

a project proposal to develop PDM technology, and won. With a $1.8 million award from ATP, and a smaller grant

from the state of California's Trade and Commerce

Agency, Calimetrics took on the challenge of developing

the technology born of the earlier laboratory experiments

of the two graduate students.

Achieving Compatibility witli Industry

Standard Production IVIethods

O'Neill, Wong, and Burke knew that attempting to redirect the entire CD market toward a new technology would

108 CALIMETRICS, INC.
be a formidable task for a small company, even if they

could raise research funding. They, therefore, made the

decision to pursue applications of the technology that

would be compatible with existing CD manufacturing

processes and usable with existing CD readers.

Standard compact discs are manufactured by spinning

a fine layer of light-sensitive material (photoresist) onto a

clean glass disc. The disc is then baked to remove the solvent. Next, the coated glass disc is engraved by a laser,

creating pits in a binary (pit or no pit) pattern, thus encoding information onto the disc. In the next step, the

exposed photoresist is developed and washed away, and a

thin layer of metal is sputtered over the master. The final

stage involves growing a thicker metal layer through galvanic action on the master disc that ultimately forms the

teeth of the die used to replicate or stamp out the pits on CD copies." The lasers in disc systems read the lack of a pit

The company faced the classic catch-22

situation of innovation financing: funding

was not available because the technology

was unproven, yet it could only be proven

if substantial financial resources were

brought to bear on the problem.

edge as a "0" and the presence of a pit edge as a "1," making

music or pictures from encoded streams of these numbers.

Building on this technique, DVDs have increased

optical storage capacity over CDs because they have smaller,

more densely packed pits on each disc. A CD-ROM holds

only 650 megabytes (MB) of data that can be read at a speed of 3 MB per second (on a 20X drive). A dual-layer

DVD-ROM holds 8.5 GB of data."

PDM technology expands and extends on the DVD

advances by creating multiple-level pits that have eight

possible depths, rather than just two. This increase multiplies the disc's storage capacity and the rate at which the

data is read. Using advanced circuits, PDM pits are engraved by adjusting the intensity of the laser to generate

a desired pit depth: the greater the intensity, the greater

the pit depth. By increasing the number of pit depths

from one to eight, PDM triples the storage capacity, as each PDM pit provides the same amount of information as three traditional binary pits. It also enables the retrieval of

information at three times the speed of traditional CDs

since the laser scans the PDM-enhanced pits at the same

speed, with three times the data content.' PDM technology

increases the standard CD-ROM storage space and

retrieval time from 650 MB at 3 MB per second to 2 GB

of data at 9 MB per second." Similar improvements are

also possible with DVD: storage capacity can be increased

from 8.5 GB to 18 GB per side on a dual-layer disc, and

read up to two times faster.'' The increase in storage

capacity and read time provided by PDM technology will

help keep optical storage discs up to pace with software

innovations and HDTV advances.

To achieve compatibility with existing products in the

optical storage industry, Calimetrics created new microchips

that can be incorporated into current CD and DVD readers and manufacturing systems to enable them to work

with PDM technology. Drive designs were modified to be

able to evaluate the intensity of laser light reflected from

the discs and, therefore, read multiple depths. This strat- egy of making their new disc technology work with existing readers and manufacturing systems was key for a small

company like Calimetrics to be able to enter into the marketplace effectively.

Other core innovations included increasing the precision of laser depth control during the disc mastering

process by reducing power fluctuations and improving the

electronics that turn the beam on and off. Coupled with

better lasers, new decoding software was also developed to

interpret data and correct errors. Additionally, Calimetrics

investigated various materials for sharpening the differ- ences in pit depths. They discovered, however, that market acceptance required standardization of materials to those already in use. The related group of supporting technologies developed by Calimetrics is expected to allow PDM to stay

compatible with expected future technologies such as

shorter wavelength lasers, faster spindle speeds, dual

lasers, and multi-layer discs. In contrast, the research

being done by other data storage companies has focused

more on the development of completely new types of

lasers to read discs. PDM and its laser-reading software

represent a cost-effective solution that can be produced

" Description by the company at <www.calimetrics.com>.

" A single-layer DVD holds 4.7 GBs of optical data.

' Design Engineering, September 1997, p. 11.

' "3-D Pits Boost Optical Storage," Photonics Spectra, July 1997,

<www.PhotonicsNet.com>, updated by Calimetrics, December 1999.

(For Calimetrics' first product, the increase in read speed will be limited

to 5.4 MBs because of electronic limitations.)

^ Matthias Henneberg, "Optical Storage Technologies," Tech Link, July

1997 (SRI Consulting).

CALIMETRICS, INC. 109
and marketed by major DVD-drive manufacturers without

major equipment changes. The PDM-related modifications increase the capital cost of a disc mastering machine

by only about 1 or 2 percent, while creating a 300 hundred

percent improvement in storage capacity and read time.

ATP Funding Nurtures PDM in A

Rapidly Clianging Market

While Calimetrics was developing PDM, concurrent technological changes were occurring in the optical storage

industry. Researchers developed phase-change technology, a

process that takes advantage of the changes in reflectivity of

a new optical disc surface as it changes between an amor- phous and a crystalline state. Information is read from the

phase-change discs by discriminating between the dark

amorphous zones and the bright crystalline zones. Phasechange technology has been embraced by industry as a low

cost, marketable technology for rewritable DVDs and CDs.

In October 1997, demonstrating both its nimbleness and

the broad applicability of the technology, Calimetrics combined phase-change technology with the ATP-funded PDM

technology to produce a new multilevel (ML) technology.

ML enables PDM encoding on rewritable and write-once

optical storage systems. The ML technology enabled

Calimetrics to keep up with the movement within the DVDCD industry for rewritable and write-once CDs and DVDs.

Industry-wide Recognition for RDM

Calimetrics publicized its PDM work soon after the fruits

of research were demonstrated. The company received

two patents for its PDM research conducted with ATP

funding, which complement the two original patents

that the company licenses on an exclusive basis from

University of California, Berkeley, and the multiple

patents that it has received after its ATP project.

Presentations by Calimetrics have contributed industrywide knowledge of PDM technology. Company researchers

made presentations at the 1997 Optical Data Storage Conference in Tucson, Arizona. In addition, PDM technology

has been featured in articles in various publications including Data Storage magazine. Popular Science, and the Wall

Street Journal. Further impact will be gained through

Calimetrics' membership in the National Storage Industry

Consortium (NSIC), a group of 60 of the nation's leading

firms, research organizations, and universities dedicated to the advancement of U.S. data-storage technologies.

Teclinology Alliances to Commercialize

PDM Technology

Texas Instruments (TI) licensed PDM and ML technology from Calimetrics in August 1999. Calimetrics has also

formed strategic partnerships with leaders in the disc drive

and media industry. It has successfully attracted new venture capital and corporate investment.

On October 30, 2000, TDK Electronics Corporation,

a Japanese-owned company, announced the creation

of a technology alliance with Calimetrics, Inc., to apply

Calimetrics' ML technology to create a new recordable

and rewritable optical disc format with three times the

capacity and three times the speed of conventional CDR/RW recording. It was announced that the first products

to incorporate the new multilevel recording technology

will be a new generation of computer drives. The company president commented, "The dramatic gains in capacity

and speed offered by the new ML format make it the

ideal bridge to the future... to the era of inexpensive

recordable DVD." At an upcoming Comdex Show in

Las Vegas, TDK and Calimetrics will demonstrate the

ML recording system for interested drive and media manufacturers, IC manufacturers, OEM suppliers and software

developers.'"

Figure 4.4 Patent Tree for Project Led

by Calimetrics: Citations by Others of

Calimetrics Patents

PATENT TREE KEY

Original Patent Second Generation Patent ^g) Third Generation Patent

Fourth Generation Patent

Fifth Generation Patent

2000

1999

5818806 5854779

Calimetrics Calimetrics 1998

Business Wire, Port Washington, New York, Oct. 30, 2000.

110 CALIMETRICS, INC.
ELECTRONICS/COMPUTER HARDWARE/COMMUNICATIONS

CREE RESEARCH, INC.

Processes for Growing Large,

Single Silicon Carbide Crystals

3st computer chips today consist of tiny eiectrical and electronic components on a thin slice of silicon

crystal. As many as five million discrete components can be placed on a piece of crystal less than two inches

square. Silicon crystal chips, however, are quite sensitive to heat. Electricity passing through a chip's superthin 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 conductivity 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 velocity, characteristics suggesting that devices

made of it can be smaller and more efficient than those

made of silicon.

. . full-color LED displays become possible

with the existence of blue LEDs, as blue

was a missing primary color.

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 car- bide devices to operate at shorter wavelengths, enabling

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * * * *

Cree's LED chips are used by Siemens A.G. for back

lighting for this dashboard.

the creation of blue light-emitting 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 oneinch-diameter silicon carbide crystals. But progress in the

development of devices based on silicon carbide had

been stymied by difficulties in growing large, high-quality

single crystals, a bottleneck that led Cree to pursue more

research.

CREE RESEARCH, INC. Ill
PROJECT HIGHLIGHTS

PROJECT:

To substantially reduce the cost and improve the durabihty of hght-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 all of the technical milestones. Successful development of the technology is indicated by the fact that the company: B applied for one patent on technology related to the ATP project; U presented several papers at professional conferences; H raised $13.2 million via an initial public stock offering in February 1993; B made high-quality, two-inch SiC wafers, greatly opening up the blue LED and SiC wafer markets; B raised approximately $17.5 million in a private stock offering in September 1995; B 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; B received $5.8 million from the Defense Advanced Research Projects

Agency in May 1995 for further development of silicon carbide growth

processes to support production of three-inch wafers; B formed Real Color Displays, a wholly owned subsidiary, to exploit this

technology for full-color LED displays;

During the ATP project, Cree advanced silicon carbide

teciinology 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 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

B received a $6 million order in September 1996 from Siemens for blue LEDs; and B 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 ATP-funded technology, are being

used in the fabrication 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.

Composite Performance Score: * * * *

COMPANY:

Cree Research, Inc.

2810 Meridian 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

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

. . . devices that were impractical to

make witti pure silicon can be made

with silicon carbide.

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 produced less expensively,

and devices that were impractical to make with pure sili- con can be made with silicon carbide.

112 CREE RESEARCH, INC.
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.

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 silicon 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 fabricating

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

The low-cost blue

light emitting diode

(LED) produced with

new silicon carbide

crystal technology.

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.

. . . silicon carbide wafers . . . used in

the first commercial-level HDTV broadcast

in the United States . . .

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 car- bide growth processes to produce three-inch wafers. If wafer size can be increased to three inches, the cost per

device will drop even further. This DARPA project got

under way in May 1995.

CREE RESEARCH, INC. 113
ii{i{((
ELECTRONICS/COMPUTER HARDWARE/COMMUNICATIONS

CYNOSURE, INC.

Harnessing Cheap Diode Lasers to Power

a Low-Cost Surgical Laser

Sur^urgery 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 procedures 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.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * * *

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

performance 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 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

Photomicrograph of an array of multilevel diffractive lenses,

fabricated with a 193 nanometer excimer laser.

a low-tech 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 Blood Institute. The comCYNOSURE, INC. 115
PROJECT HIGHLIGHTS

PROJECT:

To design an optical system for collecting, aligning, and combining beams

from an array of semiconductor lasers into one powerful beam, an achieve- ment 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 tliousands):

ATP $1,965 49%

Company 2,067 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: B 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); H published a paper on its research findings; M was ranked number 1 12 in the 1996 Inc. magazine list of the 500

fastest-growing private companies in America; H increased its sales from $626,000 in 1991 to more than $23 million

in 1997; and B is collaborating with Lincoln Laboratory and using funds from the

Small Business Technology Transfer Program to develop a low-cost

diode-laser system for treatment of arrhythmia, based on the ATP

technology, for the National Heart, Lung, and Blood Institute.

CITATIONS BY OTHERS OF PROJECT'S PATENTS: See Figure 4 5.

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-sophisticated 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.

Composite Performance Score: if ii: if

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

The researchers, however, failed to

build a system that could generate

the target power level . . .

pany 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-funded 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-coupled 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 Accomplished

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,

116 CYNOSURE, INC.
Figure 4.5 Patent Tree for Project Led

by Cynosure, inc.: Citations by Otiiers

of Cynosure, Inc. Patents

PATENT TREE KEY

Original Patent Second Generation Patent

Third Generation Patent

Fourth Generation Patent

Fifth Generation Patent

1998

1997

1996

1995

1994

5369659

Cynosure

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 four-to-six-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

The company's switch

to a different technological approach

using readily available parts to

concentrate the laser beams allowed

commercialization to resume.

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

diffractive 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 diffractive

optics. In addition, the availability of highly sophisticated

optical diagnostic equipment allowed Cynosure to better

understand and test the fiber-coupled equipment it is developing for the commercial sector.

CYNOSURE, INC. 117

ELECTRONICS/ COMPUTER HARDWARE/COMMUNICATIONS

DIAMOND SEMICONDUCTOR GROUP, LLC (DSG)

Lowering the Cost and Improving

the Quahty of Computer Chips

Millions of integrated circuits — ttie tiny ctiips ttiat run personal computers and tiiousands of otiier

electronic devices — are fabricated every year in the United States througti ion beam implantation, a technique

for introducing 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.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * * *

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.

. . . the new approach enables the

production of about 2.5 times as

many chips from a single wafer as

the 200-mm technology can make.

Worker holding the

world's first 300

millimeter silicon wafer

populated with electronic

components using the

wide beam ion implantation technology.

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 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 equipment 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 technology 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.

DIAMOND SEMICONDUCTOR GROUP, LLC (DSG) 119
PROJECT HIGHLIGHTS

PROJECT:

To develop a novel approach for introducing dopants — substances that 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 tliousands):

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: H received two patents for technology related to the ATP project: "Compact High-Current Broad-Beam Ion Implanter"

(No. 5,350,926: filed 3/1 1/1993, granted 9/27/1994) 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; M licensed the technology developed during the ATP project to Varian, which incorporated it in its SHC80 implant system and is actively

selling the equipment to commercial customers; and H licensed its technology to Mitsui Electronics and Shipbuilding for a flatpanel display application, after U.S. companies declined the licensing

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.

CITATIONS BY OTHERS OF PROJECT'S PATENTS: See Figure 4.6.

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 technology 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 technology generates for the economy.

Composite Performance Score: -k ir -k COMPANY:

Diamond Semiconductor Group, LLC (DSG)

30 Blackburn Center

Gloucester, MA 01930

Contact: Manny Sieradzki Phone: (978)2814223

Number of Employees: 9 at project start, 25 at the end of 1997

Informal collaborator: Varian Associates Inc.

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 counterintuitive,

single-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

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 ionimplant equipment manufacturer, which has incorporated

the new technology into products now being sold.

Worldwide sales of ion implanters total $1 billion to

$1.2 billion per year, and Varian has 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.

120 DIAMOND SEMICONDUCTOR GROUP, LLC (DSG)
PATENT TREE KEY

Original Patent 4^ Second Generation Patent

Third Generation Patent

Fourth Generation Patent

Rfth Generation Patent

Figure 4.6 Patent Tree for Project Led by Diamond Semiconductor

Group, LLC: Citations by Otiiers of Diamond Semiconductor Group,

LLC Patents

6026589

Thermal Systems

1999

5486080

DSG

DIAMOND SEMICONDUCTOR GROUP, LLC (DSG) 121
The uniform ribbon beam vertically scanning a wafer, in an

ion implanter manufactured by Varian Associates.

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

The new equipment . , . is ctieaper to

build and maintain and is more reliable.

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 get lower-cost, higher-quality machines.

These will enable better services at lower costs, producing

economic benefits for the businesses and their customers.

Ultimately, company officials say, the profit DSG earns from its new technology will likely be only one percent

to two percent or less of the total incremental economic

benefits the technology is apt to generate across the econ- omy, that is, the spillover benefits are likely to be large.

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 likeli- hood 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.

. . . the company's status as an ATP

participant facilitated the agreement

it negotiated with Varian . . .

122 DIAMOND SEMICONDUCTOR GROUP, LLC (DSG)

I
ELECTRONICS/COMPUTER HARDWARE/COMMUNICATIONS

ETOM TECHNOLOGIES, INC.

(formerly Optex Communications, Inc.)

Packing More Data Into Optical

Data-Storage Disks

^^^ptical data-storage devices, typically CD-ROMs (compact dis(<, read-only memory), have taken tlie 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. / n

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.)

No Stars \ y

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.

. . . barriers arose that made it impossible

to offer a cost-effective video CD-ROM.

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 CDROM 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 fre- quency. 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 polynary digit with three energy levels, however, can store 6,561 numbers. Thus, the use of just three

different energy levels instead of two increases the disk's

storage capacity more than 25 times.

Unforeseen Obstacles Block Commercialization

The company planned to manufacture and sell ETOMbased 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 cost-effective 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

ETOM TECHNOLOGIES, INC. 123
PROJECT HIGHLIGHTS

PROJECT:

To develop new optical disk data-storage technology capable of recording

digital video information on an ETOM (electron trapping optical memory)

optical disk, a development that could substantially reduce the cost of storing

digital information.

Duration: 2/15/1993 — 12/31/1994 ATP Number: 92 01 0122

FUNDING (in thousands):

ATP $1,433 56%

Company 31,118 44%

Total $2,551

ACCOMPLISHIMENTS:

ETOM demonstrated the ability to store data in a radically new optical datastorage mode. The company completed header pattem definition, mask

fabrication, and sofrivare for reading and writing M-ary (multiple-an,', as

opposed to binary) data and developed specialized test equipment. It also: M 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); M applied for 14 additional patents for technologies related to the ATP project; B prepared several technical papers for publication or presentation

at professional conferences; and 1 entered into preliminary negotiations with potential users of its

patented M-ary coding algorithms.

CITATIONS BY OTHERS OF PROJECT'S PATENTS: See Figure 4.7.

COMMERCIALIZATION STATUS:

Commercialization of the original data storage device employing the ATPfunded 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 ETOMs 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.

Composite Performance Score: No Stars

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

used the video CD-ROM to temporarily store movies and

other videos downloaded by viewer request from a cableTV company.

. . . ceased operations in January 1998

and filed for bankruptcy two montlis later.

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.

ATP Critical to Developing New Technology

ETOM reports that if it had not received the $1.4 million

ATP award, it could not have performed 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 incorpo-

. . . received 12 patents for technologies

related to the ATP project . . . applied

for 14 additional patents . . .

124 ETOM TECHNOLOGIES, INC.
PATENT TREE KEY

Original Patent Second Generation Patent

Third Generation Patent

Fourth Generation Patent

Fifth Generation Patent

Figure 4.7 Patent Tree for Project Led by ETOM Technologies, Inc.

Citations by Others of ETOM Technologies, Inc. Patents

2000

1999

1998

1997

5670956

ETOM

5675330

ETOM

5680128

ETOM

5682154

ETOM

5657014

ETOM

5659310

ETOM

5659311

ETOM

5663722

ETOM

5663723

ETOM

5682155

ETOM

5668546

ETOM

5537382

ETOM

1996

ETOM TECHNOLOGIES, INC. 125
rating 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.

126 ETOM TECHNOLOGIES, INC.
ELECTRONICS/COMPUTER HARDWARE/COMMUNICATIONS

FSI INTERNATIONAL, INC.

A Gas Method to "Dry" Clean

Computer-Chip Wafers

mufacturing 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.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * *

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 workers

. . . the presence of unwanted

particles — even in minute amounts — is disastrous . . .

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 features, 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

. . . caustic "wet" cliemicals tliat could

be liazardous to worl<ers and tliat must

be discarded after use, generating

disposal costs and the potential for

environmental pollution . . .

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 sys- tems incorporating the new technology.

ATP funding was critical to generating the gas-phase

FSI INTERNATIONAL. INC. 127
PROJECT HIGHLIGHTS

PROJECT:

To develop a cost-effective process to remove surface contaminants from

computer-chip wafers during manufacturing, using dry gases (as opposed

to wet chemicals) that can clean the ever smaller features on new

generations of chips.

Duration: 3/1/1993 — 2/28/1995 ATP Number: 92-01-0022

FUNDING (in thousands):

ATP $2,000 36%

Company 3,482 64%

Total $5,482

ACCOIVIPLISHIVIENTS:

FSI achieved its R&D goal of developing a dry gas wafer-cleaning method.

Evidence of progress is that the company: I 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); H applied for nine additional patents, one of which has been unofficially

granted (allowed but not yet published);

B presented or published nine technical papers in the area of dry cleaning,

etching or stripping of surfaces; M received a license to complementary technology that could accelerate

the commercialization of an advanced dry gas-phase cleaning system; I entered into an agreement with Texas Instruments for early-stage

testing of a prototype; and H constructed a manufacturing facility to handle all FSI International

Surface Conditioning Division manufacturing, including products

incorporating the ATP-funded technology.

CITATIONS BY OTHERS OF PROJECT'S PATENTS: See Figure 4 8

COIVIIVIERCIALIZATION 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.

Composite Performance Score: -k -k COMPANY:

FSI International, 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

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 improvements 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) minimum 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 2000. Furthermore, 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

. . . the new technology should improve

human and environmental safety

and reduce cleaning costs during

wafer processing.

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 emer128 FSI INTERNATIONAL, INC.
PATENT TREE KEY

Original Patent Second Generation Patent

Third Generation Patent

Fourth Generation Patent

Fifth Generation Patent

Figure 4.8 Patent Tree for Project Led by FSI international, Inc.

Citations by Others of FSI international, Inc. Patents

2000

1999

1998

1997

1996

5580421

FSI

FSI INTERNATIONAL, INC. 129
gence 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

FSI has continued to develop this

technology while delaying commercialization

until demand increases sufficiently.

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.

130 FSI INTERNATIONAL, INC.
ELECTRONICS/COMPUTER HARDWARE/COMMUNICATIONS

HAMPSHIRE INSTRUMENTS, INC.

(Joint Venture)

Large-Scale Diode-Array Laser

Technology for X-Ray Lithography

2"?

day's stamp-size computer chips are made by lithograptiy systems tfiat project ultraviolet (UV) or deepUV 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. /- n

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.)

No Stars V y

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 lithography equipment may use x-rays, which have shorter

wavelengths than visible or UV 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 cost-effective x-ray lithography sys- tems 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 produce x-rays. Suitable material (neodymium-doped gadolinium gallium garnet, or Nd:GGG) for this type of laser was available. However,

the inability 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 secondgeneration x-ray lithography system, and its pumping was

significantly more efficient than that of the flash lamps

Hampshire had used in its first-generation x-ray lithography system. In addition, life testing of laser-diode pump

systems showed they lasted much longer than the longestlasting 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 second-generation 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 lithography.

HAMPSHIRE INSTRUMENTS, INC, 131
PROJECT HIGHLIGHTS

PROJECT:

To develop a laser-diode-pumped laser system for generating x-rays in a new

generation of lithography equipment to enable a major advance in the miniaturization of computer chips while reducing manufacturing costs.

Duration: 7/1/1991 — 9/30/1992 ATP Number: 90-01-0126

FUNDING (in thousands):

ATP $926 50%

Company 930 50%

Total $1,856

ACCOIVIPLISHIVIENTS:

Researchers demonstrated the feasibility of using a powerful laser-diodearray to pump up the energy level of Nd:GGG (neodymium-doped gadolini- um 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 affordabiliry

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.

COMIVIERCIALIZATION 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 lithography 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 lithography will be reached in a few years, x-ray lithography continues to arouse interest. If the industry comes to view the x-ray approach as a

viable candidate for a new generation of lithography equipment, the technology developed in this ATP project could be revisited.

COIVIPANIES:

Hampshire Instruments, Inc. (joint venture lead)

(Since April 25, 1993, no longer in business)

Composite Performance Score: No Stars

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 Phone: (602) 891-2194

Informal collaborator: Lawrence Livermore National Laboratory

High Expectations Dashed by Bankruptcy

Evidence at the start of the project suggested the ATPfunded 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 solidstate laser markets.

Soon after the ATP project was

completed, Hampshire ran into serious

financial problems, declared

bankruptcy and was liquidated.

Hampshire, however, ran into serious financial problems and failed to raise the additional 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

. . . MDC built two prototype laser-diodepump systems that each delivered more

than 750 kW of peak power, by

far the highest laser-diode power

produced by any device . . .

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.

132 HAMPSHIRE INSTRUMENTS, INC.
ELECTRONICS/COMPUTER HARDWARE/COMMUNICATIONS

LIGHT AGE, INC.

Exploiting Alexandrite's Unique Properties for a

Less-Expensive, More-Reliable Tunable Laser

Llasers today drive many devices throughout the consumer and commercial worlds. There are tiny ones

in printers and CD-ROM 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 shorter UV wavelengths known

as vacuum UV (VUV) light.

The new device is the brightest (most

powerful) available tunable source of laser

light over much of the UV spectrum.

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 spectrum.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * *

The Pal/Pro - UVTM laser system, tunable to 248 nanometers,

193 nanometers, and other ultraviolet wavelengths.

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

The laser can be tuned, for example, to

the wavelength of a light beam that

destroys diseased tissue while leaving

healthy tissue undamaged.

LIGHT AGE, INC 133
PROJECT HIGHLIGHTS

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 1.010 59%

Total $1,712

ACCOMPLISHIVIENTS:

Light Age accomplished its R&D goal. The company also: B introduced several new or improved laser products incorporating the ATP technology, including: UVoTM — 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; B 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 B received more than $10 million worth of product orders, which are

currently being filled.

COMIVIERCIALIZATION 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 ATPfunded 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.

Composite Performance Score: ir

COMPANY:

Light Age, Inc.

2 Riverview Drive

Somerset, NJ 08873

Contact: Donald F. Heller Phone: (732) 563-0600 Number of employees: 10 at project start, 28 at the end of 1997

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. Shorterwavelength 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 deep-UV laser sources that produce light at 248 nm. Future generations of computer

chips may require VUV laser sources that produce light

at wavelengths of about 193 nm or even shorter.

Large Benefits to Intermediate Users

and Customers

Light Age makes UV and VUV lasers costing $20,000 to

$200,000. They are used in applications such as health

care and scientific equipment 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.

Economic benefits are accruing to intermediate

customers and end users of the new technology in medical

applications. Many applications of the new laser technology are in environments such as medicine and weather

forecasting, where the economic benefits to others

besides Light Age are likely to be large.

Light Age is already a significant

exporter of laser systems . . .

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.

134 LIGHT AGE, INC.
This research aims to develop methods for measuring

the temperature and wind speed at very high ahitudes.

Current measurement systems mainly use only groundlevel 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 1991. 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 $2.8

million in revenues and, at the beginning of 1998, had

back orders worth more than four times its 1997 sales.

requirement for cost sharing. The belt-tightening 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 development 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 additional funding from private investors.

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-own-bootstraps

company in terms 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 rigorous financial discipline during the

company's early development in order to meet the ATP

LIGHT AGE, INC. 135

ELECTRONICS/COMPUTER HARDWARE/COMMUNICATIONS

LUCENT TECHNOLOGIES INC

(formerly AT&T)

Precision Mirrors

for Advanced Lithography

r

.he personal computer revolution has been powered, in large part, by the development and production of

I generations of memory, CPU (central processing unit), and other chips. With each generation, chip feature

?s shrink. However, chip feature size is reaching the limit of what can be produced with current lithography

ipment. A new approach to lithography that can operate at shorter

'elengths is essential if the integrated circuit industry is to continue

advance toward more powerful computer chips.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * *

/anced Optics to Enable Chip Miniaturization

i ATP project with Lucent Technologies (formerly

ScT) Bell Laboratories significantly improved the accu-

' of precision reflective optics — complex multilayer-

;ed mirrors — that are critical for extreme ultraviolet

JV) lithography. EUV, or soft x-ray, technology is one

everal possible approaches to advanced lithography for

lufacturing chips.

^ new approach to lithography that can

erate at shorter wavelengths is essential

if the integrated circuit industry is to

continue to advance toward more

powerful computer chips.

The goal of the project was to discover whether it is

iible to create ultrahigh-precision aspherical mirrors

; properly reflect EUV wavelengths for use in lithogra-

. This was a high-risk, technically challenging project.

^ cost sharing enabled Lucent to move ahead with a

ect that otherwise would have been difficult to justify,

icularly because so much of the funding would go to

aborators outside the company. Ultimately, the ATP

ject showed that the technical obstacles were sur- jntable and that the optics can be manufactured,

isured, and aligned.

Characterizing the complex shapes of these mirror surfaces with the high level of precision required for ELIV

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 University of

Wisconsin, developed other techniques required to characterize aspheric mirrors. The project also generated

increased understanding of multilayer-coated 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, roundrobin 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 dramatically 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

LUCENT TECHNOLOGIES INC. 137
PROJECT HIGHLIGHTS

PROJECT:

To develop new fabrication, testing, and alignment techniques for malting

extremely precise aspheric (nonspherical curvature) mirrors to use for lithography in the extreme ultraviolet (EUV) portion of the 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 3,525 64%

Total $5,525

ACCOMPLISHIMENTS:

Lucent and its subcontractors developed dramatically improved techniques

for fabricating, testing, and aligning extremely precise aspherical, multilayercoated mirrors essential to EUV technology, a candidate for future lithogra- phy systems. Lithography is a key step in manufacturing integrated 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.

H Tinsley Laboratories, a subcontractor, fabricated mirrors 10 times more

precise than any produced 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

systems development.

I three computer chip fabrication companies have agreed to invest $250

million over three years to continue the research, development and perhaps ultimate commercialization of ELIV lithography technology. A critical component of this technology is the multilayer-coated mirrors that were the focus of this ATP project.

COIVIIVIERCIALIZATION 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 measure- ment 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 twenry-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 equipment. If this approach proves to be

technically and commercially viable, it will enable a new generation of chipmaking equipment that will generate benefits for chip manufacturers, as

well as users of computers, communications equipment, and other electronic

devices containing the new chips.

COIVIPANY:

Lucent Technologies Inc., Bell Laboratories

(formerly AT&T Bell Laboratories) Room 3C428

600 Mountain Ave. Murray Hill, NJ 07974

Composite Performance Score: -k ic

Contact: Richard R 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.

project aimed to find out whether the EUV approach to Hthography deserved further consideration or whether the

mirrors constituted a showstopper technical barrier that

could not be surmounted. The project demonstrated that

the mirror technical barrier could, indeed, be overcome.

. . . this high-risk project aimed to find out

whether . . . the mirrors constituted a

showstopper technical barrier that

could not be surmounted.

Progress on all the advanced-lithography candidate

technologies developed in parallel at industry 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 lithography and

focus its attention on another option — scattering with

angular limitation projection electron-beam lithography

(SCALPEL) — 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 Livermore and Sandia

National Laboratories.

138 LUCENT TECHNOLOGIES INC.
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 lithography. EUV systems would draw on

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 equipment.

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 EUV lithography equipment incorporating the new

aspheric mirror technology becomes the technology 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.

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 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.

The researchers presented or published

more than two dozen papers about precision metrology aspheric mirror fabrication,

and lithography systems development

. . . 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.

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.

Information 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 ATPfunded technology into research and development work

that could lead to systems that are commercialized in

the future.

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

LUCENT TECHNOLOGIES INC. 139
II(I
ELECTRONICS/COMPUTER HARDWARE/COMMUNICATIONS

MULTI-FILM VENTURE

(Joint Venture, formerly the Annerican Scaled-Electronics Corporation)

Joining Several Chips Into One

Complex Integrated Circuit

.n the race to boost the performance 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 enor- mous 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.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * * *

New Capabilities From Interconnected Chips

On a seemingly unrelated front, the need frequently arises

for large electronic displays — in hospital operating rooms,

military command 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.

. . . raised $26.6 million from a second

public stock offering in March 1993 . . .

Attempts to greatly increase the scale of single-IC fabrication have been accompanied by commercially unacceptable 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 Laboratory at the Massachusetts

Institute of Technology) — used ATP funding to speed

up by two years the development of technology 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 ATP-funded development of advanced methods for positioning IC components with micron-scale alignment and for connecting

individual ICs, as well as new adhesive procedures for

bonding chips together. It is also based on proven IC fabrication methods and proprietary thin-film transfer 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, they would replace

MULTI-FILM VENTURE 141
PROJECT HIGHLIGHTS

PROJECT:

To show the feasibility of inteiconnecting thin-film integiated circuits (ICs),

packed side by side or in layers, to form a complex, multifilm 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 48%

Company 2,973 52%

Total $5,749

ACCOMPLISHMENTS:

MFV developed the MFM technology and demonstrated it in a large,

flat-panel display. In actions related to the project, Kopin:

U 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; M raised $26.6 million from a second public stock offering in March 1993; H 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;

B raised $31.8 million via private equity investments since the end of the ATP project.

CITATIONS BY OTHERS OF PROJECT'S PATENTS:

See Figure 1.6, Chapter 1, and Figure 4.9.

COMMERCIALIZATION STATUS:

Commercialization is expected within one or two years for products incorporating the 3D microprocessor technology. Large-area flat-panel displays 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.

Composite Performance Score: * * *

COMPANIES:

Multi-Film Venture (MFV; formerly the American Scaled-Electronics Consortium)

Kopin Corporation (joint venture lead)

695 Myles Standish Blvd.

Taunton, MA 02780

Contact: Ollie Woodard

Phone: (508) 870-5959 Number of employees: 70 at project start, 100 at the end of 1997 Other joint venture participant: MCC, Inc. (formedy

Microelectronics & Computer Technology Corporation)

large single-panel displays based on relatively expensive

technologies such as liquid crystal display. The new technology also has potential applications in desktop computer

. . . researchers proved the feasibility

of transferring thin-film, single-crystal

silicon ICs to a substrate and

interconnecting them to form a

functioning multifilm module . . .

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 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 application, 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 connected using the

ATP-funded MFM technology. This project is supportedby $5 million from the Defense Advanced Research

Projects Agency.

Kopin Succeeds in Capital Markets

Although products incorporating the ATP-funded technology are not yet on the market, they are likely to arrive

142 MULTI-FILM VENTURE
Figure 4.9 Patent Tree for Project Led by

Multi-Film Venture: Citations by Others

of Multi-Film Venture Patents^

PATENT TREE KEY

Original Patent Second Generation Patent

Third Generation Patent

Fourth Generation Patent

Fifth Generation Patent

1999

1998

5656548

MFV

1997

. . . potential applications in desktop

computer displays and — with volume

production and lower prices — in wall

displays for the home.

soon. Kopin has shown that it can carry out commerciaUzation 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.

' Also see the patent tree for a different patent from the same project

shown in Figure 1.6, Chapter 1.

MULTI-FILM VENTURE 143

ELECTRONICS/COMPUTER HARDWARE/COMMUNICATIONS

NATIONAL CENTER FOR MANUFACTURING SCIENCES

(NCMS)

A Collaborative Effort to Address Advanced Technology

Needs of the U.S. Printed Wiring Board Industry

p.rinted wiring boards (PWBs) underpin ttie efficient manufacture of virtually all electronics products. PWBs provide

the platform on which to mount integrated circuit chips, capacitors, and connectors for the manufacture of everyday

products ranging from toys, toasters, copy machines, and pagers to computers. Circuit patterns in copper or another conductor are etched on the surface of an insulating material to make

connections among components typically mounted on the fiberglass board.

And because they are a component to any larger electronics assembly,

PWBs are an essential component of many other U.S. technologies.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * * * *

U.S. Producers Loosing in Global Competition

Between 1984 and 1990, the U.S. wotld share in the manufacture of printed wiring boards decHned significantly,

from 42 percent to 26 percent, with lost market share

captured by lower-cost foreign competitors using increasingly sophisticated technology. In 1991, the profile of the

U.S. PWB industry was one of many small firms with little market power or research capability: 725 firms produced

PWBs, but most had annual sales of less than $5 million

in specific niche markets. These small firms lacked the

...the profile of the U.S. PWB industry

was one of many small firms with little

market power or research capability. . . A printed wiring board test veliicle used by the surfaces finlslies

team, witli different solderability test metliod coupons labeled.

resources to undertake R&D on a scale that would achieve

technology breakthroughs, and could only support R&D

that addressed particular and immediate product development goals. Meanwhile, users of PBWs were forecasting

that in the near future they would have to procure an

increasing share of PWBs from foreign producers whose

technical advances were outstripping those of U.S. producers.

ATP Supports Collaborative R&D Initiative

for "Leapfrog" Technical Advances

A few leading equipment suppliers with advanced

research capabilities, concerned with the decline of the

U.S. domestic PWB industry, coalesced to form a research

joint venture to address the technology gap faced by

domestic PWB producers. These equipment producers,

all major consumers of PWBs, utilized their membership

in the National Center for Manufacturing Sciences, a nonprofit organization that specializes in brokering collaborative R&D projects, to organize the joint venture. The

NCMS helped to organize the collaborative project among

four of its member companies.

The joint venture, comprised of the four major companies, with NCMS as the coordinator, applied in the

ATP's 1990 General Competition for a five-year project.

The initial participants were AT&T, Digital Equipment

Corporation (DEC), Hamilton Standard Interconnect

NATIONAL CENTER FOR MANUFACTURING SCIENCES 145
PROJECT HIGHLIGHTS

PROJECT:

To develop advanced processes and procedures for making printed wiring

boards (PWBs), tiie backbone of ail U.S. electronics products, that would

leapfrog existing domestic and foreign technologies, thereby re-energizing

the U.S. PWB industry in the face of sevete international competition. The

goal was to assist U.S. suppliers of printed wiring boards to become able to

supply the boards of the future, through advances in materials, surface

finishing, imaging, and overall product design.

Duration: 4/15/91-4/14/96

ATP Number: 90-01-0154

FUNDING (in thousands):

ATP $12,866 48%

Company 13.771 52%

Total $26,637

ACCOMPLISHMENTS:

The project teams undertook many tasks in four technical areas and made a number of significant accomplishments. Accomplishments achieved by the team or following from those achievements include: U demonstration that single-ply fiberglass could be produced with a sufficiently regular surface to allow for reliable electrical performance at a

substantial cost savings, such that it has become the industry standard and the military has adopted it as a reliable product;

M broader applications for an imidazole treatment for copper that improves on the use of soldering as a way of preventing oxidation of copper

surfaces, to which component leads must be connected; H a test procedure for evaluating the process for producing PWBs, which

allowed users of PWBs to conduct quality tests on sample boards, thus

enabling them to evaluate the production methods used by PWB suppliers; U demonstration of the effectiveness of thin copper plating in adhering to

fiberglass in order to reduce the amount of copper used (saving resources) and lessening processing time (increasing productivity); H a new interconnect structure—Multilayer Organic Interconnect Technology (MOIT) that may revolutionize the fabrication of PWBs, by

achieving much higher wiring density than does current PWB technology;

H a plasma monitoring device which was, in turn, furthered by Sandia

through a Sematech project, and eventually commercialized by a spin-off company—Peak Sensor Systems—formed by Sandia scientists; M commercialization of single-ply glass technology by a leading supplier

of glass laminate to PWB producers;

H commercialization of thin copper by Polyclad, a leading supplier of copper plating to PWB producers;

H further development of imidazole treatment for conducting surfaces

(earlier patented), and licensing of it to LeaRonal, Inc., which supplies

the treatment to PWB producers;

H formation of a new company. Conductor Analysis Technologies, Inc. (CAT), to commercialize the testing procedure developed by the imaging team and used by equipment manufacturers to verify that PWB shops have the technical capabilities necessary to build new high tech designs;

I 214 papers presented on the project; H two best-paper awards at industry conferences; H a patent on conductor analysis technology filed and received by NCMS,

which then licensed the technology to a start-up company: "System and Method for Analyzing Conductor Formation Processes" (No. 5,659,483) M a patent for prepeg bonding copper filed by NCMS but not yet received; H development of novel PWB applications for block copolymer adhesion

promoters, which facilitate lower copper profiles and thinner materials, by Sandia scientists working on the project, and a patent for a solder

delivery method filed but not yet received by Sandia scientists;' and

a patent for the test method developed to quantify capillary flow solderability was filed and received by Sandia National Laboratories

"Solderability Test System" (No. 5,827,951).

CITATIONS BY OTHERS OF PROJECT'S PATENTS: See Figure 4.10.

COMMERCIALIZATION STATUS:

The different joint venture participants and their licensees have been able to

successfully commercialize component technologies arising from this project. A leading supplier of glass laminate to PWB producers brought the single-ply

fiberglass technology to market. Polyclad, a supplier of copper plating to PWB producers, has been able to commercialize thin copper. Joint venture member AT&T licensed the imidazole treatment that was developed earlier,

but demonstrated for PWB applications in the project, to LeaRonal, Inc., which now supplies the treatment to PWB producers under the brand name

Ronacoat OSP. It is used in large volume by leading board manufacturers

such as Omni-Circuits, Inc., in Chicago, Illinois, and Pacific Circuits, Inc. (now part of TTM Technologies, Inc.) in Redmond, Washington.

Conductor Analysis Technologies, Inc. (CAT), the company created as a

spin-off of research conducted by the imaging team, offers to leading equip- ment producers, such as Motorola and Hewlett Packard, rapid, reliable tests

of sample boards. The testing services offered by CAT allow the equipment

producers to evaluate the capabilities of PWB suppliers, thereby decreasing

the amount of time and money spent moving new PWB designs into production. Faster market entry in turn translates into cheaper and better products

for consumers of electronics.

OUTLOOK:

The adoption of project-related technical advances coincided in a turnaround

in the performance of the U.S. PWB industry. According to the IPC's 1999

Repoft on the World Market for Printed Wiring Boards and Substrate

Materials, world production of PWBs in 1998 posted a record high of $34.3

billion, up from $32.5 billion in 1997. Growth in the U.S. share of global PWB production has become positive, where it had been negative a decade

ago. Recent IPC figures show that U.S. growth in the PWB industry is

expected to be about 3.8 percent in 1999, and worldwide growth about 6.6

percent.' The outlook appears much brighter now for the U.S. PWB industry

than it did at the beginning of the project. With furthei dissemination of the

technology developed in the ptoject, further stiengthening is expected.

The outlook for technologies developed under this project are manifold: some of the component technologies have already been absorbed and surpassed in an industry where any development is a moving target, or have become building blocks to further developments and sparked further

research. Others, such as the single ply laminates, have become the standard

for the industry. Some products based on the ATP funded technologies are

available commercially, i.e., Ronacoat OSP and the CAT testing sendee. Some of the component technologies have yet to be fully explored, or are

still being pursued independently by former project participants. Many benefits from this project have been and are being realized, and future benefits

are expected.

Composite Performance Score: * * * *

COMPANIES:

National Center for Manufacturing Science (joint venture lead) Ann Arbor, MI

Contact: Edward Miller Phone: (734) 995-0300

Joint Venture Participants: AT&T, Digital Equipment

Corporation, Hamilton Standard Interconnect Systems, Inc., Texas

Instruments, Sandia National Laboratories, Allied Signal, Hughes

Electronics, and IBM.

NATIONAL CENTER FOR MANUFACTURING SCIENCES
Systems, Inc. (a division of United Technologies, Inc.),

and Texas Instruments. Sandia National Laboratories

joined the project shortly after it was formed.

ATP awarded the project $13.8 million. Industry

participants matched ATP's funding with $14.7 million,

with a total project budget of $28.5 million. Based on the

proposal submitted by NCMS, ATP awarded NCMS $13.8

million toward the five-year project, scheduled to break

ground in April 1991. Industry participants matched

ATP's funding with $14.7 million, with a total project

budget of $28.5 million. During the project, Sandia,

funded by the Department of Energy, contributed an

additional $5.2 million to the project.

Over the life of the project, membership in the joint

venture changed. Eighteen months into the project, DEC

decided to withdraw. During the next three years. Allied

Signal, Hughes Electronics, and IBM joined, fulfilling

the research agenda originally assigned to DEC.

This largely horizontally structured joint

venture appears to have been unusually

successful in achieving active collaboration

among participants, substantive teaming

to carry out major project tasks, and

extensive sharing of information.

Successful Collaboration In a Horizontally

Structured Joint Venture

Studies have shown that horizontally structured joint ventures of direct competitors may experience difficulties in

establishing trust and sharing information.^ And most of

the participating companies produced PWBs. This largely

horizontally structured joint venture, however, appears to have been unusually successful in achieving active collaboration among participants, substantive teaming to carry

out major project tasks, and extensive sharing of information. There are several factors that seem to have contributed to its collaborative success.

One factor is that the companies, though producers

of PWBs, were also consumers of PWBs and rarely direct

competitors with each other. They utilized PWBs for

significantly different products.

Another factor that appears to have contributed to the

successful collaboration is the administrative and management arrangement. The NCMS, as project coordinator,

handled the administrative tasks, including accounting,

contract details, and legal and intellectual property issues.

A steering committee, staffed by technical personnel from

each joint venture participant, managed the technical

aspects of the project.

Project Goals

The NCMS project sought progress in PWB technology

and manufacturing in four areas: materials, soldering,

imaging, and chemical processes. Research teams —

staffed by technical personnel from each joint venture

participant — were formed for each area. Although there are two types of PWBs, rigid and flexible, rigid PWBs account for approximately 90 percent of

global PWB production. Rigid PWBs are constructed from

a fiberglass base, made by taking woven fibers of glass,

filling the weave with epoxy resin, and applying pressure

to form the sheets that harden and become rigid. The

materials team focused on the construction of rigid PWBs,

usually made from sheets of double-ply fiberglass, in turn

made from two layers of woven glass. The materials team

sought to develop cost-saving, single-ply boards. They had

to overcome a commonplace obstacle presented by singleply sheets: these tended to have surface irregularities that

led surface metal circuits to meet and short out when the

surface warped under heat or pressure. Thus, the materials

team had to deliver a regular surface on a single-ply,

rigid PWB.

Industry recognition of the successful

research efforts of this project includes best

paper awards to two of the many research

papers that came out of the project.

' The Sandia scientists received a patent for the concurrent technology supported by internal Sandia funding —"Block Copolymer Adhesion Promoters

via Ring-Opening metathesis Polymerization," patent number 5,603,985.

" IPC, "Management Briefing on the Global Outlook for 1999," available by request from the IPC director of market research via e-mail <CarlaWehrspann@ipc.org>.

See, for example, Jeffrey Dyer and Benjamin Powell, Determinants ofSuccess in ATP-Sponsored R&D Joint Ventures, NIST Contractor Report (December

2001).

NATIONAL CENTER FOR MANUFACTURING SCIENCES 147
The components on a PWB are connected by soldering component leads to the surface of the PWB. Soldering

defects are a significant problem in the production of

printed wiring assemblies, basically PWBs that are populated with components, such as integrated circuits. The

soldering team aimed to develop ways to automate testing,

to reduce the number of defects by identifying and using

different materials in the soldering process, and to produce

alternative surface finishes. The testing and repair of sol- dering defects provided an area of potential cost saving:

most testing heretofore was performed manually.

The soldering team also sought to develop an alternative to solder to prevent the oxidation of copper surfaces on PWBs in storage. Oxidation of the copper on the stored

boards renders the contacts—the copper surfaces to which

component leads are attached—unsolderable. In the past,

contact surfaces have been preserved by solder. The use

of solder, however, is messy and imprecise and limits the

application of PWBs in circuit designs requiring increasingly fine connections. The goal of the soldering team was to develop a surface finish that would prevent oxidation, but

at the same time would leave the copper surface free of

obstacles to the etching of fine circuit patterns.

The imaging team sought to investigate and stretch

the bounds of the imaging process to improve resolution,

conductor yield, and dimensional regularity. It aimed to improve the projection of patterns along which circuits are placed to reduce the number of defects on boards.

The fourth team, originally known as the chemical

processes team, later the product team, sought to advance

the understanding of the chemical processes involved in

producing the copper plating used in the PWBs to interconnect the components. The chemical processes team

aimed to develop a thinner copper plating that would

adhere to the PWB fiberglass base. This approach was

seen as a way to save money by using less copper and

reduce processing time. In cooperation with Polyclad, a copper plating supplier, they tested the performance of

thinner copper plating. When the chemical processes

team ran into difficulty securing financial support from

joint venture participants for other copper research not

considered high priority, the joint venture steering committee formed another team. The new product team had

the more general goal of developing high-density interconnect structures, considered a high priority goal. In making

this change, NCMS worked with ATP to redefine the

research effort.

Research Achievements

The efforts of the various teams paid off. The materials

team achieved the noteworthy goal of developing and

demonstrating the feasibility of single-ply fiberglass for

A close-up of an individual

chip attaclied to a printed

wiring board.

use in PWBs. They demonstrated that it could be produced with a sufficiently regular surface to allow for reliable electrical performance at a substantial cost savings.

It has become the industry standard and the military has

adopted it as a reliable product.

The materials team also developed a plasma-monitoring tool, which has a large potential for cost avoidance.

Originally developed to monitor printed circuit boards,

Sandia National Laboratories, in the post-project period,

extended the application from PWBs to detect defects in

microchips. If a defect in microchip manufacturing goes

unnoticed after the wafer has undergone multiple processes — for instance, if circuits are etched to the wrong depth —

it can translate into millions of dollars in expenses or lost

sales after the ATP project was over, as part of a Sematech

project. The effort resulted in a spin-off company formed

by Sandia scientists, Peak Sensor Systems, which has filed

19 patents for related technologies, and has had 3 granted.

Now in its third year, the company has three models of the

Peak Propak plasma-monitoring device, and has achieved

$1 million in sales. The research path is sketched out past

the ATP project, in this case, to illustrate the complementarities that often exist across research efforts. The materials team also developed PWB applications

for a block copolymer that facilitates lower copper profiles

and thinner materials. Scientists from Sandia, concurrent

with the ATP project, developed a block copolymer technology under internal Sandia funding, which they were

able to patent. The Sandia scientists as part of the materials team developed PWB applications for the block

copolymer technology. Sandia also has a patent pending

for prepeg bonding copper.

The soldering team successfully developed better

methods of testing solder and produced a surface finish

that adequately protects the board in multiple soldering

applications. The team also explored applications of the

imidazole solution—originally developed by Bell Labs^ —

to prevent oxidation of copper surfaces in a solder-free

manner, and to demonstrate its applicability for a wide

148 NATIONAL CENTER FOR MANUFACTURING SCIENCES
range of uses. Joint venture participant AT&T subsequently licensed the technology to LeaRonal, Inc., which

commercialized the treatment under the brand name

Ronacoat OSR The company describes its product as a "production-proven, low-cost, environmentally benign

alternative" to substitute products.'

The imaging team was able to achieve PWB production process improvements. The imaging team developed

methods to increase the yield of PWBs without flaws,

and in fact, the yield on 3-mil board increased from 30 to 50 percent, and the yield for 2 mil boards from 10 to 50

percent. Another way the imaging team improved quality

control was to introduce a test procedure for evaluating the

underlying process used to produce PWBs, based on the

analysis of a sample board. This development stimulated

the creation of a spin-off company—Conductor Analysis

Technologies. The company sells this testing service to equipment manufacturers and PWB shops.

The imaging team was also successful in demonstrating the feasibility of a new photolithography tool called

Magnified Image Projection Printing. This tool has the

potential to provide a contact-free way of printing PWBs,

which could in turn eliminate problems caused by the

current imaging-etching process. If successful, this technique could significantly improve manufacturing of the

boards by allowing for finer, more tightly interconnected

lines as little as three mils apart. The NCMS decided to pursue the development of the prototype tool as a separate

project, without ATP support, and the final report of

this research effort is now available from NCMS.''

Before it was regrouped as the product team, the

chemical processes team developed thinner copper plating

and tested its performance in cooperation with Polyclad.

The chemical processes team was able to demonstrate the

effectiveness of thin copper plating in adhering to fiberglass. The approach saves money because it uses less copper. It also reduces processing time, because less copper

has to be etched away to make connections on the board.

Research efforts by the product team on high-density

interconnect structures produced a novel interconnect

structure—the Multilayer Organic Interconnect

Technology (MOIT)—that has the potential to revolutionize the fabrication of PWBs. By radically increasing the

number of connections to and from a device on the board

by taking advantage of making connections from the

bottom of the board, in addition to the standard surface

connections, the MOIT offers the possibility of achieving

much higher wiring density than current PWB technology.

IBM Endicott is pursuing MOIT.

Public Recognition

Industry recognition of the successful research efforts of

this project includes best paper awards to two of the many

research papers that came out of the project. One of these

awards was presented at the fall 1994 meeting of the

Institute for Interconnecting and Packaging Electronic

Circuits (IPC)."

The president of NCMS, John DeCaire, also bestowed public praise on the project at a press conference

in 1997. He stated that the ATP project had "quite

literally saved the [then] $ 7 billion U.S. PWB industry

a key segment of the $20 billion domestic electronic interconnection industry that employs over 200,000 people.'"*

Teclinology Diffusion and Industry Impacts

The NCMS project achieved significant technical successes

in each of the four areas targeted by the joint venture

participants. Three of the efforts—single-ply boards, thin

copper plating, and conductor analysis technology—delivered commercial advantages to the PWB industry and

The president of NCMS, stated that the ATP

project had "quite literally saved the [then]

$ 7 billion U.S. PWB industry—a key segment of the $20 billion domestic electronic

interconnection industry that employs

over 200,000 people."

* Bell Labs patented the formula in 1983, patent number 4373656, and AT&T licensed the technology to LeaRonal, Inc. Viasystems is the successor owner of the patent.

' See LeaRonal's, website at <www.learonal.com> for a listing of products and their applications.

See the NCMS website at <www.ncms.org> for a description of the report. Magnified Image Projection Printing Project Final Report. The MIPP project was dissolved prior to the completion of the illumination system design and building of the prototype due to the withdrawal of the system integrator,

and no viable commercial integrator showed interest in participating in the project. The intent of the report is to preserve the knowledge generated

during the project if any future efforts are undertaken.

'IPC is a U.S. based trade association of nearly 2,500 member companies representing all facets of the electronic interconnection industry, including

design, PWB manufacturing, and electronics assembly.

NATIONAL CENTER FOR MANUFACTURING SCIENCES 149
economic benefits to the equipment manufacturers who

are their customers.

The project's successes and the acclaim received have

furthered PWB technology diffusion within the industry.

Technology diffusion among industry suppliers was aided

by the decision of project leaders to include suppliers to

the PWB industry in the process of developing the technologies. In fact, over the life of the project, almost every

team meeting involved working with suppliers across vari- ous industries such as glass manufacturers, weavers, laminators, resin manufacturers, equipment manufacturers,

printers, and chemical suppliers.

. . .almost every team meeting involved working

with suppliers across various industries such

as glass manufacturers, weavers, laminators,

resin manufacturers, equipment manufacturers,

printers, and chemical suppliers.

Producers of PWBs report gains from project related

advances that have been implemented into production.

For example, 85 percent of the PWBs used by AT&T now

incorporate single-ply technology, and this conversion to

single-ply technology has saved AT&T at least $3 million

per year. Another company reported a 50 percent decrease

in solder defects, due to the soldering process improvements developed during the ATP project.'"

The ATP catalyzed a small group of companies with

advanced research capabilities to undertake a wide-reaching project that would benefit the entire industry. The

resulting NCMS-coordinated project conducted a research

effort that would otherwise not have been pursued by the

individual equipment manufacturers and PWB producers

without the ATP, or only at a slower pace and in a far more

costly way. The project encouraged the research teams

to pursue two technologies—single-ply boards and thin

copper plating—that challenged conventional wisdom,

which held that these options were unfeasible.

An independent study undertaken on behalf of the

ATP concluded that the ATP's presence supported and

sustained research outcomes. The study's survey of joint

venture participants found that "of the 62 research tasks

completed by the PWB joint venture, about one-half

would not have been undertaken at all in the absence

of ATP funding, and the remaining one-half would have

been delayed by at least one year without the ATP, in an

industry where timing is critical."" In addition, the study

found that by collaborating on the research, the companies

,a 50 percent decrease in solder defects

saved an estimated $35.5 million on those tasks they

would have undertaken anyway, although at a slower

pace. Savings resulted mainly from the labor efficiencies

achieved and the duplicative test equipment avoided.

(The study did not assess in a systematic way the benefits

from the part of the research that would not have been

done at all without the ATP.)

Figure 4.10 Patent Tree for Project Led by

NCMS: Citations by Others of NCIVIS Patents

PATENT TREE KEY ^9 Original Patent Second Generation Patent

iSSSs Third Generation Patent

Fourtli Generation Patent

FIftli Generation Patent

2000

1999

1998

1997

5659483

NCMS

* Albert Link, Ear/y Stage Impacts of the Printed Wiring Board Research Joint

Venture, Assessed at Project End (1997), p. 28.

''May 13, 1997, NCMS News Release, "Landmark Collaborative Research Program Credited with Saving Domestic Printed Wiring

Board Industry."

'"Link, Early Stage Impacts p. 26.

" Link, Early Stage Impacts, p. iv.

150 NATIONAL CENTER FOR MANUFACTURING SCIENCES
ELECTRONICS/COMPUTER HARDWARE/COMMUNICATIONS

NETOPTIX CORP.

(formerly Galileo Corporation)

Low-Cost Night-Vision Technology

^^bjects 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.

f N

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.)

Seeing in tlie Darl<

If a way could be found to magnify the unseen emissions

that 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.

... a much less expensive process to

make devices widely available to law

enforcement officials and the estimated

400,000 Americans suffering from

retinitis pigmentosa . . .

Such glasses already exist. They were developed for

military use and are quite expensive. High-performance

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

No Stars

fabrication processes and higher performance prototype

MCPs that it would otherwise have been unable to do and

helped the company form alliances with research partners

and contractors.

New Electron IVIultipliers

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 developed 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 performance improvements.

Galileo's ATP project abandoned the glass-fiberoptic

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 succeeded in the

technical goals of the project, developing new fabrication

procedures and using them to demonstrate prototypes of

working, high performance electron-multiplier devices.

NETOPTIX CORP. 151
PROJECT HIGHLIGHTS

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 estimated 400,000 Americans

suffering from retinitis pigmentosa (night blindness).

Duration: 4/1/1993 — S/31/1995 ATP Number: 92-01-0124

FUNDING (in tliousands):

ATP $1,910 57%

Company 1,428 43%

Total $3,338

ACCOIVIPUSHIVIENTS:

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: I 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); H published five technical papers, including one as a dissertation and four in professional journals; H produced working vacuum-electron multipliers by microfabrication methods; and

I developed thin-film techniques to produce dynode structures that support electron multiplication in MCPs and other channel electron

multiplier devices.

CITATIONS BY OTHERS OF PROJECT'S PATENTS: See Figure 4 11

COIVIIVIERCIALIZATION STATUS:

No products based on the ATP-funded technology have yet reached market.

OUTLOOK:

Prospects for commercialization of this technology 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:

NetOptix Corporation (formerly Galileo Corporation)

Sturbridge Business Park

Sturbridge, MA 01566

Composite Performance Score: No Stars

Contacts:

Enrique Bernal G.

Galileo Corporation

Phone: (508) 347-4291

William Tasker

Center for Advanced Fiberoptic Applications

Phone: (508) 765-0180 Number of Employees: 314 at project start; 240 at the end of 1997

Financial Distress

During the last 6 months of its 26-month ATP project,

Galileo encountered financial problems and decided to abandon its original goal of in-house commercialization of

During the last six montlis of its 26

montli ATP project, Galileo encountered

dire financial problems and decided

to abandon its original goal of

in-house commercialization . . .

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 performance 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 medium sized

optics companies in the mid-Massachusetts area. Galileo

granted a nonexclusive royalty-free license of the ATPfunded technology to CAFA. The principal investigator on the ATP project left Galileo to become section head

152 NETOPTIX CORP.
Figure 4.11 Patent Tree for Project Led

by NetOptix: Citations by Otiiers of

NetOptix Patents

PATENT TREE KEY

Original Patent Second Generation Patent

Third Generation Patent

Fourth Generation Patent

Fifth Generation Patent

2000

1999

1998

1997

1996

5618217

Galileo

1995

5569355 1 5568013 H 5544772

Galileo 1

Galileo Galileo

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 commerciaUzing the ATP-funded MCP technology,

but the chances for commercialization are uncertain at

this time.

NetOptix granted a nonexclusive,

royalty-free license of the ATP-funded

technology to CAFA.

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 confirmed. Demonstrated lower costs and improved performance would make it more feasible

to pursue new market opportunities for applications to address night blindness.

. . . CAFA is pursuing partnerships

with a nunnber of companies as an

avenue for commerciaUzing. .

.

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 spectrometer 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.

NETOPTIX CORP. 153

ELECTRONICS/COMPUTER HARDWARE/COMMUNICATIONS

NONVOLATILE ELECTRONICS, INC. (NVE)

Computer RAM Chips That Hold

Memory When Power Is Off

K^on

r

fonventional random access memory (RAM) computer chips record information written or copied into ttiem by

a computer, and they hold that 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.

r ^

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * * *

RAM That Remembers Without Power

If a memory chip could store data permanently, it would

prevent these accidental loses of information. And if it could be produced in small sizes at competitive costs, the

new chip would greatly affect how computers are configured and used. For example, an insertable card containing

memory chips (which have no moving parts) could be substituted for a hard disk drive.

Civilian Use of MRAIVI Technology

This ATP project with Nonvolatile Electronics (NVE),

founded in 1989 (and operated from the founders house

until the ATP award), aimed to develop such a memory

GMR sensors have many

applications . . .

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 considerations, 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 vs^hen placed in a magnetic field.

In 1988, scientists discovered that a sandwich of metals

shows a much larger change in resistance than a single

The clean room at Nonvolatile Electronics in which GMR

sensors and other devices are fabricated.

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 improvements to production

throughput, or yield. These developments are all important for lowering barriers to commercializing the technology for civilian applications. The researchers made prototype high-quality MRAM cells that were successfully

demonstrated at Honeywell.

A Promising Spin-off Application

As NVE 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

NONVOLATILE ELECTRONICS, INC. (NVE) 155
PROJECT HIGHLIGHTS

PROJECT:

To develop magnetoresistance technology for use in making computer ran- dom access memory (RAM) "nonvolatile" — data will not be lost when

power is turned off.

Duration: 4/1/1991 — 3/31/1994 ATP Number: 90-01-0166

FUNDING (in tliousands):

ATP $1,785 67%

Company 869 33%

Total $2,654

ACCOIVIPLISHIVIENTS:

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:

H 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); I entered into an agreement with Microtrace in 1996 to use a OMR-based

procedure to make counterfeiting of aircraft parts much easier to detect

(development work is under way);

M licensed the ATP-funded technology to Honeywell (for use in military

and avionics applications), which incorporated it into computer systems

placed in government agencies; and

B transferred knowledge about GMR materials to members of an ATP joint

venture working on technology for magnetic disk storage based on the GMR effect.

COIMIVIERCIALIZATION 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 outiook 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.

Composite Performance Score: ic

COIVIPANY:

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

sensors. A major application for sensors based on the new

technology is possibly in antilock brake systems in automobiles and trucks. These systems 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 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 more accurate 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 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

In a vehicle equipped with an antilock

brake system incorporating NVE sensors,

the driver will have better skid and

stopping control.

new company division for this purpose. Its sales of GMRbased 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

156 NONVOLATILE ELECTRONICS, INC. (NVE)
Photomicrograph of a GMR magnetic field sensor, with actual

dimensions of 436 x 3370 microns.

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

NVE entered into an agreennent with

Motorola in 1995 to develop MRAMs . . .

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 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.

NVE has offered its knowledge to

other companies, universities and

national laboratories.

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 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 incorporating 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 antipersonnel 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 formerly 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 prevented 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.

NONVOLATILE ELECTRONICS, INC. (NVE) 157

ELECTRONICS/COMPUTER HARDWARE/COMMUNICATIONS

SPIRE CORPORATION

A Feedback-Controlled, Metallo-Organic

Chemical Vapor Deposition Reactor

Liaser 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.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * *

Advanced Fabrication Control for

Improved Electronic Devices

This ATP project with Spire Corporation developed 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 (MOCVD) 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

The advanced metallo-organic chemical vapor deposition reactor

constructed with funding from ATP.

potential customers. The company also planned to produce low-cost laser diode arrays in competition with

foreign producers, but that market did not develop.

Spire has successfully used the prototype reactor to perform customer-specific research and development and

SPIRE CORPORATION 159
PROJECT HIGHLIGHTS

PROJECT:

To develop an advanced feedback-controlled, high-throughput, metalloorganic chemical vapor deposition (MOCVD) reactor for fabricating low-cost,

high-qualiry laser diode arrays.

Duration: 6/15/1992 — 3/31/1995 ATP Number: 91-01-0263

FUNDING (in tliousands):

ATP $1,223 56%

Company 973 44%

Total $2,196

ACCOMPLISHIVIENTS:

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

development work. Signs of the project's success include the fact that the company: U published four papers and presented several others at professional conferences during the award period;

H demonstrated the ability to grow epitaxial wafers with high-quality uniformity of composition and thickness over an entire wafer 2.25 inches in

diameter; H demonstrated the ability to fabricate vertical cavity surface emitting lasers (VCSELs) with state-of-the-art performance characteristics; M published a 1997 update on use of the ATP-funded reactor, "In Situ

Monitoring and Control for MOCVD Growth of AlGaAs 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 M expanded sales of commercial epitaxial wafers (mostly for lasers and

light-emitting diodes), with sales revenue of about $200,000 in 1998.

COIVIIVIERCIALIZATION 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.

Composite Performance Score: ir ic

COIVIPANY:

Spire Corporation

1 Patriots Park

Bedford, MA 01 730-2396

Contacts: Harvey B. Serreze or Kurt J. Linden

Phone: (781) 275-6000 Number of employees: 180 at project start, 150 at the end of 1997

A wafer populated

with arrays of vertical

cavity surface emitting lasers.

to produce epitaxial laser wafers of a demanding structure. 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 feedback-controlled reactor for growing laser wafers for VCSELs and

edge-emitting lasers. VCSELs would be used in highspeed 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

. . . planned to produce low-cost laser

diode arrays in competition with foreign

producers, but that market did not develop.

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.

160 SPIRE CORPORATION
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 company's new method makes possible the manufacture of individual lasers

and laser arrays at lower cost and with

higher performance characteristics.

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 ATPfunded 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.

ELECTRONICS/COMPUTER HARDWARE/COMMUNICATIONS

THOMAS ELECTRONICS, INC.

Flat Fluorescent

Lamps for Displays

JL—JvIvery 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.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.)

More-Visible Instrument Displays for Safer Flying

Today, almost every cockpit display uses cathode ray tube

(CRT) technology. CRTs are a proven technology, have a long history and are fabricated by Thomas Electronics —

which undertook this ATP project — for use in the manufacture of cockpit displays. CRT displays, however, have

In some circumstances, such as

bright sunlight, visibility of displays

may be seriously diminished.

a well-known drawback: 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 flat-panel 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 air- plane 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.

Flat fluorescent lamps for flat panel display backlighting, in a variety

of sizes, ranging from 1.5 inches to 12.5 inches on the diagonal.

In conventional fluorescent lamps, a cathode 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 earlier because of the difficulty

in generating a bright plasma in the thin space between

wide, flat sheets. Conventional cathodes are too inefficient

THOMAS ELECTRONICS, INC. 163
PROJECT HIGHLIGHTS

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: M entered pilot production of flat lamps for key customers in the U.S. display industry; M 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 U 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 SO units per month. If customer 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 refinements to the technology based

on feedback from customers using prototype units. If the technology is commerciahzed, its users — aircraft manufacturers, airlines and their passengers — will benefit from brighter, more reliable and cheaper backlights for flatpanel displays in airplane cockpits.

Composite Performance Score: ^

COMPANY:

Thomas Electronics, Inc.

100 Riven'iew 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

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

Flat fluorescent lamps were not developed

earlier because of the difficulty in

generating a bright plasma in the thin

space between wide,''flat sheets.

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 com164 THOMAS ELECTRONICS, INC.

parable 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 company 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, Honeywell, 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.

. . . these new lamps can be used for

rugged flat-panel displays in applications

such as military tanks.

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.

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.

ELECTRONICS/COMPUTER HARDWARE/COMMUNICATIONS

VITESSE SEMICONDUCTOR CORPORATION

Gallium Arsenide: a Faster Alternative to Silicon

for Microprocessors and Telecommunications Applications

1early all integrated circuits (ICs) are manufactured on a substrate of silicon. The silicon cfiip tias provided

the base on which IC technology has advanced. But silicon has its limits. Electrons pass through GaAs about five

times faster than through silicon, suggesting potential for achieving higher processing speeds from ICs fabricated

from GaAs. In the 1970s and 1980s, research efforts were undertaken to

develop gallium arsenide (GaAs) as an alternative material for fabricating

integrated circuits.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * * *

Barriers to Use of GaAs-based ICs

Despite their speed advantage, GaAs-based ICs, developed in the 1980s, did not find widespread commercial

use. One barrier to their use was price. GaAs cost as much

as 10 times more than silicon in the early years. The

wafers from which GaAs chips are made were difficult to produce without a high level of defects. And, they were

difficult to produce at all. More recently, this cost barrier

has been significantly reduced as wafer suppliers and chip

producers have perfected manufacturing techniques.

Another barrier to widespread commercial use of

GaAs-based ICs was their high power consumption.

Unlike silicon ICs, which consume power only while performing processing tasks, GaAs ICs consume power even when they are not in operation. The use of GaAs as a substrate for ICs had been pioneered for military applications,

namely in microproccessors for supercomputing. Military

users were willing and able to pay the considerable premium for GaAs-based chips in return for superior processing

speed. Commercial users, however, saw the high power

requirements as an unacceptable obstacle.

The high power requirements placed limits on the

exploitation of the inherent speed advantage of GaAs.

More wiring was needed to transmit more power to the

chip, crowding out the wiring needed to transmit the

input and output signals; thus fewer transistors could fit on the same chip. So constrained, GaAs technology had

to employ several chips to equal the capacity of a single

silicon chip, causing much of the speed advantage of

GaAs to be lost in the time delays between chips.

Vitesse's ability to fabricate cliip's on 6" wafers in it's new plant,

(instead of 4" wafers) more than doubles the number of intergrated

circuits that can be fabricated on each wafer and increases the

efficiency of production.

The ability of GaAs to compete with silicon for use in

ICs was contingent on design innovations that allow the

particular advantages of GaAs to be exploited effectively.

The years of accumulated design and manufacturing

process refinements, however, had been devoted to siHcon-based ICs, not GaAs-based ICs.

Vitesse Proposes GaAs Design Innovations

Vitesse Semiconductor Corporation, at that time a small

company, proposed a project for GaAs innovations in

ATP's 1993 General Competition. ATP made an award

of $2 million to Vitesse for a 33-month project, later

VITESSE SEMICONDUCTOR CORPORATION 167
PROJECT HIGHLIGHTS

PROJECT:

To achieve design innovations needed to exploit the speed and power advantage of GaAs, a substrate material for fabricating high-performance integrated

circuits (ICs) for use in microprocessors, transceivers, and ICs used in automatic testing equipment.

Duration: 3/01/94-12/31/96

ATP Number: 93-01-0124

FUNDING (in tliousands):

ATP $2,000 30%

Company 4.634 70%

Total $6,634

ACCOMPLISHIVIENTS:

Initial applications of GaAs design innovations in the development of a

supermicroprocessor for use in supercomputers and workstations were

abandoned due to market uncertainty. Vitesse refocused its efforts on the development of GaAs design innovations for transceivers used in telecommunications and data communications, and for ICs used in automatic test

equipment. Project accomplishments included: H 400 percent increase in memory per chip; H 50 percent decrease in size of an IC for equivalent functionality; I 50 percent reduction in power consumption;

H GaAs design innovations commercialized as H-GaAs IV-based

technology in transceivers and ATE; H construction of a new, more efficient chip fabrication plant to fabricate GaAs chips on six inch wafers instead of four inch wafers; M disseminated the technology through articles in the Electronic

Engineering Times, Computer Design Magazine, Lightwave, and

Semiconductor FabTech; and

M enabled ATE producers to be able to test increasingly fast ICs.

COIVIiVIERCIALIZATION STATUS:

The design innovations in GaAs have been commercialized in the form of H-GaAs IV-based IC technology. It is being applied to transceivers for use

in telecommunications and data communications, which now account for

approximately 80 percent of Vitesse's revenues. H-GaAs IV-based ICs are

also used in automated test equipment (ATE), accounting for the remaining

20 percent of Vitesse's revenues. Virtually all ATE makers have purchased H-GaAs IV-based ICs from Vitesse. Every Intel Pentium microprocessor

built has been tested by ATE using Vitesse ICs. Success in these markets

has allowed Vitesse to build a new and more efficient chip fabrication plant.

OUTLOOK:

H-GaAs IV IC technology has enabled Vitesse to produce transceivers and

chips for automated testing equipment that offer substantially lower system

costs than silicon IC sets previously used. H-GaAs IV IC technology has

allowed ATE producers to overcome the technological limits of silicon IC

technology to be able to test increasingly faster ICs. The project has reduced

or eliminated major barriers limiting the use of GaAs, and the company has

taken the technical advances achieved in the project into commercialization. The outlook appears strong.

Composite Performance Score: -k ir ^

COIVIPANY:

Vitesse Semiconductor Corporation

741 Calle Piano

Camarillo, CA 93012

Contact: Mr. Ira Deyhimy

Phone: 805-388-7511

extended to the maximum allowable period of three-years.

Vitesse contributed $4.6 million, bringing total project

costs to $6.6 million.

The company, located in Camarillo, California, has

become a world leader in the design, development, and

manufacture of GaAs ICs. It pioneered the development

of Very Large Scale Integration (VLSI) in GaAs, and also

pioneered the adaptation of proven state-of-the-art silicon

chip manufacturing equipment to the production of GaAs

chips to reduce their cost and improve reliability.

Project Goals and Early Results

The project s first objective was to shrink the size of and

reduce power consumption of GaAs-based ICs by creating

a supermicroprocessor. By replacing multiple chips with a

single-chip supermicroprocessor, transfer delays would be

eliminated and the speed advantage of GaAs fully realized. Two secondary objectives were to use the improved

GaAs ICs in communications applications and automatic

testing equipment (ATE).

The research started with the development of electrical and process models to help determine the optimal

design of GaAs ICs that would exploit their speed advantage. With the insights provided by these simulations,

Vitesse created a library of basic IC components that permitted the construction of a demonstration vehicle to test design performance. The initial demonstration vehicle was

a microprocessor, which, in turn, was to be used to test designs of the supermicroprocessor.

Market Changes Compel Reorientation of Project

Unexpectedly, Vitesse was forced to abandon its supermicroprocessor objective at the end of the first year of the

project. Although the supercomputer and workstation markets for GaAs supermicroprocessors appeared to be a rea- sonable target at the time of the project's proposal and

selection, subsequently the market for supercomputers

steeply declined. The decline was due in part to the collapse of government and aerospace demand for supercomputers. Early in the project, Convex Computers, the only

supercomputer producer using GaAs-based microprocessors (and Vitesse's only customer in this application) suf168 VITESSE SEMICONDUCTOR CORPORATION
fered serious losses. Convex Computers had accounted for

half of Vitesse's revenues.

Vitesse requested a change

in the project, and ATP agreed to

allow a change in focus. .

.

Vitesse confronted a large investment risk in entering

the high-performance microprocessor market. Higher performance microprocessors are split between two competing standards: complex instruction set computers (CISC)

and reduced instruction set computers (RISC). Within

these broad classes, many fundamental architectural differ- ences exist, each with its own specific demands. Vitesse

would have to bet on one. Moreover, Vitesse would have

to supply compilers, linkers, math libraries, and other

high-level software to complement any microprocessor

that it chose to make. This would require a daunting

investment of up to $30 million.' The company's financial

condition and the uncertainty characterizing the direction

of the high-performance microprocessor market led

Vitesse to seek alternative opportunities for GaAs technology during the first year of the project.

Vitesse requested a change in the project, and ATP

agreed to allow a change in focus on developing and testing GaAs design innovations for use in the development

of wire-line transceivers and ICs for automatic test equipment (ATE). This use for GaAs IC technology was on the

rise. Networks of workstations, configured to emulate a supercomputer at far less cost, were becoming increasingly

popular, and these workstations, like other local area networks (LANs), require the use of transceivers for data

transmission and error-checking.

There are also many other applications for transceivers.

They are essential in telephone communications that share

large volumes of digital data among various points, such as

central switching offices and cellular transmission sites. Credit card companies also rely on transceivers for the data

links that connect databases and terminals, ensuring speedy

authentication during transactions. Transceivers will also be

an essential component in digital television. Transmission

of digital television signals from television stations to home

sets, between the cameras and the studio, and between the

studio and the network facilities will all require very highspeed links with transceivers at either end.

ATP Flexibility Important to Company's Future

Success: Funding Supports Critical Shift in

Business Strategy

By accepting Vitesse's request that it be allowed to shift

the project's focus for applying the technology rather than

stopping the project, ATP enabled Vitesse to continue the

development of GaAs technology following the business

reverses of its main customer. According to Ray Milano of

Vitesse, ATP funding was essential for sustaining its development of GaAs technology. Accomplishments in

the project ultimately allowed the company to build its

position in wire-line transceivers and ICs for automatic

testing equipment.-

Design Innovations Achieved

Vitesse made substantial progress toward the revised project goals. Vitesse designated the new generation of GaAs

IC technology developed from the project's design innovations as H-GaAs IV. The H-GaAs IV embodies a 50 percent decrease in size for equivalent functionality, and

requires just half as much power to deliver the same

amount of processing speed. Memory per chip was

increased four-fold.

The H-GaAs IV embodies a 50 percent

decrease in size for equivalent functionality,

and requires just half as much power to deliver

the same amount of processing speed.

Higher levels of integration and reduced power con- sumption made possible by project-related design innovations have allowed Vitesse to provide GaAs-based ICs with

clear advantages over traditional silicon-based ICs, both for

transceivers and ICs for automatic testing equipment (ATE).

Project Innovations Embodied in Transceivers

and ATE Equipment

The old technology for ATE employed multiple, linked

silicon ICs to perform the same task as one H-GaAs IV IC.

The greater number of connections required to link the

silicon ICs with the IC to be tested, the greater space they

took up, the power consumed, and the amount of heat

generated caused ATE producers to be very receptive to

Vitesse's H-GaAs IV. Virtually all ATE makers, including

' This estimate was developed in discussions between Vitesse and Compaq, a prospective customer and development partner.

^ In-person communication between Phil Perconti, ATP, and Ray Milano, Vitesse, March 1999.

VITESSE SEMICONDUCTOR CORPORATION 169
Every Pentium microprocessor built has

been tested by ATE using Vitesse ICs

Intel, have purchased GaAs chips from Vitesse. Every

Pentium microprocessor built has been tested by ATE

using Vitesse ICs.

Overall, the chief commercial application of H-GaAs

IV-based IC technology has been for transceivers used in

telecommunications and data communications. Customers

include telecommunication equipment makers such as Lucent Technologies, Alcatel, and Ericsson.

...ttie chief commercial application of

H-GaAs IV-based IC technology has been for

transceivers used in telecommunications

and data communications.

Success in these markets allowed Vitesse to build a major new chip fabrication plant. This plant will fabricate

chips on six-inch wafers. Heretofore, GaAs ICs have been

fabricated on four-inch wafers. The shift to six-inch wafers

will more than double the number of ICs that can be fabricated on each wafer, dramatically increasing the efficiency

of GaAs IC production.

Producers and Customers Benefit from Lower

Costs, New Capabilities

H-GaAs IV-based ICs offer a superior alternative to sili- con-based transceivers. Because just one IC must be purchased, and because the Vitesse transceiver consumes less power than the set of silicon ICs, total system cost is

substantially less.

...substantial cost and performance

advantages over silicon ICs...

H-GaAs IV IC technology has been instrumental in

meeting the needs of ATE producers and their customers.

The ICs used in ATE must be faster than the ICs to be

tested. Silicon technology was running up against technical limits. H-GaAs IV IC technology has allowed ATE producers to overcome the technological bottleneck and produce equipment with the capability to test increasingly

fast ICs.

Increased levels of integration and reduced power

consumption made possible by project-related design

innovations in GaAs-based IC technology have enabled

Vitesse to provide substantial cost and performance advantages over silicon ICs, both for transceivers and for ICs

used in automatic testing equipment.

170 VITESSE SEMICONDUCTOR CORPORATION
ADVANCED TECHNOLOGY PROGRAM

CHAPTER 5

Information

Technology

INFORMATION TECHNOLOGY

COMMUNICATION INTELLIGENCE CORPORATION (CIC)

Computer Recognition of

Natural Handwriting

Kjinc'ince the beginning of the computer age during World War II, 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 mainframe computers, and then for desktop

computers as well.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * *

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

. . . received, in early 1997, tine

"Ease-of-Use Seal of Commendation

from the Commendation Program

of the Arthritis Foundation . . .

particular settings and circumstances, such as conducting

inventory on the shop floor or a geology survey 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 five percent of the

U.S. population when this project was proposed in ATP's

first competition in 1990.

Software Tliat Recognizes Cursive Writing

Communication Intelligence Corporation (CIC), a small

California company spun off from SRI International (formerly Stanford Research Institute), has addressed these

A computer user entering information Into her PC with a pad and stylus. Company software in the PC converts the data from the pad into

letters and words.

keyboard problems by using technology created in its ATP

project for a reliable, cost-effective 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

COMMUNICATION INTELLIGENCE CORP. (CIC) 173
PROJECT HIGHLIGHTS

PROJECT:

To develop a natural handwriting data-entry system 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 tliousands):

ATP $1,264 58%

Company 912 42%

Total $2,176

ACCOIVIPUSHIVIENTS:

CIC developed new data-entry software technology that recognizes each

user's natural handwriting without training the computer or the user. The company: H incorporated some of the ATP-funded technology into an existing software product, Handwriter®, giving it the ability to recognize connected

letters in cursive writing in limited circumstances (previously, it recognized only handprindng);

B licensed the Handwriter® software to more than a dozen computer

manufacturers around the worid, generating $360,000 in revenue from

sales of 30,000 units in 1997; M launched a new product in 1996 called Handwriter® MxTM, a stylusand-tablet data-entry device using the upgraded Handwriter® software;

sold 11,000 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.

COIVIIVIERCIAUZATiON 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 languages other than English are incorporated into the approach.

The company is actively seeking additional market opportunities for further

distribution of its products.

Composite Performance Score: -k ir

COIMPANY:

Communication Intelligence Corporarion (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

the project by collecting a database with thousands of cursive handwriting samples and developing new recognition

algorithms. After analyzing the handwriting-sample database and developing the recognition methods, they also

developed procedures that permit fast computation with

modest computer memory requirements.

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 currently available commercially cannot yet read fully cursive handwriting. It is able,

however, to recognize connected letters in cursive writing

in limited circumstances. 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.

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

. . . this technology . . . opens up possibilities for much wider use of computers and

expanded market opportunities for U.S.

producers of hardware and software.

large computer chain, with a retail price of about $200.

The other product, Handwriter® fxTM, 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 11,000 units of these two

products, generating revenues in excess of $2.2 million.

174 COMMUNICATION INTELLIGENCE CORP. (CIC)
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 modern desktop computers and to run fast enough to keep up with a typical person's handwriting speed. That obstacle is now being

addressed.

. . . thousands of cursive handwriting

samples . . .new recognition algorithims

. . . fast computations . . .

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 useful 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.

ATP Partnership Speeds Teclinology Development

ATP'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®

MxTM, 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 original goals.

Help for Victims of Artliritis

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.

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.

COMMUNICATION INTELLIGENCE CORP. (CIC) 175

COMMUNICATION INTELLIGENCE CORPORATION (CIC)

Chinese Character-Recognition

Methods for Computer Data Entry

fhina 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.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * *

Accessing China's Giant Computer

IVIarket 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.

, 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-and-tablet 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 commercialize English handwriting recognition technology. In its first ATP project,

CIC developed 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

1 M +

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.

applied several techniques 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 Tliat Recognizes Nonalphabetic Writing

For the foundation of its system, CIC developed a highquality 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 standard

set of characters determined by the Chinese government

to be used by schools, publishers, and other institutions.

COMMUNICATION INTELLIGENCE CORP. (CIC) 177
PROJECT HIGHLIGHTS

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 62%

Company 911 38%

Total $2,391

ACCOIVIPLiSHIVIENTS:

CIC fulfilled its goals by developing a recognition system for Chinese characters. The company's progress is indicated by the fact that it: I collected a high-quality database of about 750,000 Chinese characters penned by 2,800 Chinese viriters; B 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; U entered into a joint venture with the Ministry of Electronic Industries

of Jiangsu Province, China, to perform system integration ser^'ices and to

market the company's pen-based business computer systems to Chinese

businesses and government agencies;

I released the first major product version of its character-recognition

software in September 1997; and

B entered into discussions with several major U.S. computer companies

about incorporating the CIC character recognition technology into

their computers for sale in China.

COMIVIERCIALIZATION 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.

Composite Performance Score: -k

COIVIPANY:

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 stan, 93 at the end of 1997

The technology can be apphed 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 more-angular strokes). Application to handwritten Japanese is also complicated by the interspersion of

Chinese characters and English words in Japanese writing.

Entering the Chinese IVIarket

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 perform 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 agreement, 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.

. . . entered into discussions witfi several

major U.S. computer companies about

incorporating tlie CIC ctiaracter recognition

teclinoiogy into tlieir computers for

sale in China.

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 potential

market is vast. But solving the technical barrier to entering

178 COMMUNICATION INTELLIGENCE CORP. (CIC)
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.

. . the ATP award helped the company

develop licensing agreements and

secure a joint-venture partner.
I

I

I
INFORMATION TECHNOLOGY

ENGINEERING ANIMATION, INC. (EAI)

Three-Dimensional Anatomy of Human Body,

With Animation, for Medical Training

Ivery 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.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.)

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

The 3D aspect is critical, because flat

pictures do not provide enough information

for a good understanding of anatomy

and surgical procedures.

making training tools to help surgeons and patients better

understand important aspects of surgical procedures before

they are performed. The technology was developed 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 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

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.

known efforts to gather digital anatomical data from different sources into one uniform database or to present that

data in 3D motion.

"Walk-Through" Surgery

During the ATP project, EAI researchers developed algorithms for a system that can show realistic 3D images of

human body parts and their motion. The pictures of tis- sues and organs can be manipulated to present a walkthrough 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.

ENGINEERING ANIMATION, INC. (EAI) 181
PROJECT HIGHLIGHTS

PROJECT:

To develop computer visualization and computational dynamics technology

for presenting animated 3D images of the human 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

FUNDING (in thousands):

ATP $1,947 76%

Company 625 24%

Total $2,572

ACCOIVIPUSHIVIENTS:

EAI developed core algorithms to enable the creation of 3D images from sets of 2D cross-sectional 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: M received the Smithsonian Award from Comptitenaorld magazine in 1994,

for the use of information technology in the field of medicine; B received the Award of Excellence in Animation from the Association of

Medical Illustrators in 1995; H 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; H incorporated the ATP-funded technology in the tools EAI uses to provide custom modeling in biomedicine, health education, and custom

animation; H raised $30.5 million via an initial public stock offering in February 1996; I opened international offices in 1997 and 1998, in England, France, Germany, Italy, and Malaysia;

B received one of the 25 Technology and Innovation Awards from

Industry Week in 1996; B 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;

B raised another $26.6 million via a second public stock offering in

June 1997; B was named one of "America's Fastest Growing Companies" by

Individual Investor magazine, September, 1997; B had its CEO, Matthew Rizai, recognized as one of the best entrepreneurs

of 1997 hy Business Week magazine, January 12, 1998; and B 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.

COIVIIVIERCIALIZATION STATUS:

The new computer visualization and computational dynamics technology

developed in this project has been successfully commercialized. Though an eady 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 publications 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 animations

which utilize computer visualization and computational dynamics.

OUTLOOK:

Further potential applications of the technical capabilities developed in the ATP project — and extended by subsequent research and product develop- ment — appear abundant. When a reduced-price hardware/software system

to support the Virtual Human technology becomes available, potential econo- my-wide benefits should be large as a result of likely wide-spread use of the

technology in health care.

Composite Performance Score: * * *

COIVIPANY:

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

The realism of these images was achieved by using

new databases with digitized, two-dimensional (2D)

images showing cross-sections 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 computergenerated 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 its own funds to combine the new technology

182 ENGINEERING ANIMATION, INC. (EAI)
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

relation of the beating

heart to electrical impulses

captured by the EKG.

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 sys- tem. 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.

. 20 employees at project start,

400 at the end of 1997 . . .

In the meantime, much of the ATP-funded technology that went into the Virtual Human has been adapted

to three CD-ROMs (The Dissectable HumanTM, The

Dynamic HumanTM, and CardioViewer 3DTM) and two

medical books which use unique prints showing 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 EAI's 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 stu- dents "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-funded technology, both the

anatomical database and the motion capability, in the tools

it uses to provide custom modeling in biomedicine, health

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 type of open-surgery repair has a morbidity

rate of 15 percent to 40 percent.

In January 1997, EAI entered into an agreement 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 soft- ware will automatically calculate key aortic measurements,

based on actual CT (computerized tomography) data, and

enable doctors to walk through a patient's anatomy on the

computer. The software allows doctors to identify structures, discern damaged and healthy tissue, and determine

a patient's condition without performing 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 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.

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" . .

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

ENGINEERING ANIMATION, INC. (EAI) 183
A 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 alongside the bones.

invasive surgeries, the ATP-funded 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 hfe 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.

. . . much of the ATP-funded technology

has been adapted to three CD-ROMs

(The Dissectable HumanTM, The Dynamic

HumanTM, and CardioViewer 3DTM)

and two medical books . . .

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 development were $869,000, and in

that year it received $564,000 from its ATP grant, about 65

percent of its total research and development budget.

When it appHed for the ATP grant in 1991, EAI's 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 busi- ness separately, and its computer animation software 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 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 Computerworld 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

Technology and Innovation Award from Industry Week,

specifically for its interactive 3D visualization and dynamics products used in the manufacturing sector for product

development.

ATP Funding Plays a Crucial Role

According to EAI officials, the company would not have

been able do its research and development work without

the ATP funds. 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. And it enabled the company

to significantly extend its capabilities in computer visualization and computational dynamics, providing new technology that could be applied to other areas of the company's activities.

184 ENGINEERING ANIMATION, INC. (EAI)
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 Street Journal, Matthew Rizai,

CEO of the company, noted that winning the ATP award — which was for $1.9 million — gave him leverage 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.

Awards for technical

achievements roll in.

Business Week magazine, in its January 12, 1998, issue, rec- ognized 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

United States — with a rank, of number eight.

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 rev- enues 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 hidividual Investor

magazine, EAI was named one of "America's Fastest

Growing Companies." And, early in 1998, two additional

magazines recognized the company's achievements.

ENGINEERING ANIMATION, INC. (EAI) 185
iiiIIIii{
INFORMATION TECHNOLOGY

MATHEMATICAL TECHNOLOGIES INC. (MTI)

Mathematical Technology

to Restore or Enhance Movies

.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.

Viewers of many films, botli current

and archival, are benefiting from what

they do not see: defects removed

by the technology.

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

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * *

Old Movies: a Resource Too Valuable to Waste

Movies mean reels of film. Commercial moviemaking

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.

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.

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

MATHEMATICAL TECHNOLOGIES INC. (MTI) 187
PROJECT HIGHLIGHTS

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: S/l/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: I formed MTI Digital Restoration Services early in 1996, a division now

actively marketing software and restoration services in video post-production;

B 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; H participated, via MTI Digital Restoration Services, in acclaimed restorations of recent rereleases of Federico Fellini's Amarcord 3.nA Cecil B.

DeMille's Ten Commandments; and

H had 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 forward-looking 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.

Composite Performance Score: * *

COMPANY:

Mathematical Technologies Inc. (MTI)

1 Richmond Square

Providence, RI 02906-5139

Contact: Donald E. McClure

Phone: (401)831-1315

Number of employees: 4 at project start, 6 at the end of 1997

. . . the 1958 film A Night to Remember

. . . Fellini's Amarcord . . . DeMille's

Ten Commandments . . .

scan lines and 50 Hz. High-definition TV will have a

different pair of numbers.

A second format 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 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 problems 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.

Researchers developed mathematical

algorithms to create data for filling

in damaged areas . . .

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.

188 MATHEMATICAL TECHNOLOGIES INC. (MTI)
MTI researchers succeeded in developing some components needed for format conversion. Work on other

components is still experimental. The researchers thoroughly investigated motion compensation (which concerns

the way moving objects are detected in a movie) and

determined how to make adjustments 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-funded 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-definitionTV 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 software 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 filmrestoration 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 without 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 rereleased, a commentator on the television program "Entertainment

Tonight" reported that "the difference between the original and this new vibrant version is a revelation. . . . Digital

technology is the modern miracle that's made it possible."

As MTI's mathematical algorithm technology 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.

/A ne\N algorithm for converting from ordinary video resolution to high-definition-TV

resolution was demonstrated . . .

in April 1998.

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 reformatting technology

is completed and commercialized, additional benefits

will accrue.

MATHEMATICAL TECHNOLOGIES INC. (MTI) 189
({{i(I((
INFORMATION TECHNOLOGY

TORRENT SYSTEMS, INC.

(formerly Applied Parallel Technologies, Inc.)

A User-Friendly Programmer's Tool

for Writing Parallel-Processing Software

.assively 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.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * * * *

Easy-to-Do Programming for Parallel Processing

A difficulty with parallel processing, however, 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-processing 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 parallelsoftware component framework, created its basic components, and performed 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. The company,

however, 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.

MrMBS B Mgvta Sun

100 -» 0 S 0

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.

Torrent incorporated the ATP-funded componentbased technology in a product called OrchestrateTM, 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.

TORRENT SYSTEMS, INC. 191
PROJECT H

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 tliousands):

ATP $1,117 77%

Company 325 23%

Total $1,442

ACCOMPLISHMENTS:

Torrent accomplished most of the project goals, including development of a

software environment 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 developed

early in the project. Torrent's outstanding progress toward commercialization

is indicated by the following: H The company applied for a patent on parallel training of neural networks,

as well as patents on several other innovations. H Torrent incorporated the ATP-funded technology in a product called

OrchestrateTM, introduced to the market in 1996. The company describes it

as "a parallel development environment that insulates you from the complexities of parallel programming while delivering scalable applications." M OrchestrateTM was described in a December 1996 Datamation article,

"Build Your Warehouse on MPP," 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 Airiines. H 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. H Torrent entered into partnerships in September 1997 with three new vendors: The MEDSTAT Group, i.d.Centric, and Knowledge

Discovery One.

IGHLIGHTS

B 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. B 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. H At the end of 1997, Computerworld magazine recognized Torrent as one of

the "100 Hot Emerging Companies."

H 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. I United Airlines, an early customer, is using OrchestrateTM and an IBM

parallel-processing computer to design a system for managing airplane

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 usefulness 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.

Composite Performance Score: * * * *

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

Strategic Marketing Alliances

The company has been quick to form strategic marketing

aUiances. It formed a partnership with IBM in July 1997,

under which IBM will promote OrchestrateTM as a stan- dard computer application. IBM's focus is rapid development 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. OrchestrateTM 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 OrchestrateTM.

United Airlines, an early customer, reported in a

. . . halted the project sooner than

originally planned to exploit the excellent

comnnercial opportunities for technology

developed early in the project.

192 TORRENT SYSTEMS, INC.
November 1997 Chicago Tribune article that it had

installed a new IBM RS6000/SP2 parallel-processing computer. The software supplied by IBM included

OrchestrateTM under a licensing agreement between

Torrent and IBM. United paid $3.5 million for the hard- ware 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. OrchestrateTM

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.

i.d. Centric, and Knowledge Discovery One. And it negotiated bundling arrangements (selling two or more separately produced products as a unit) with independent soft- ware 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 OrchestrateTM have benefited from the

removal of the need to pay attention to programming

details for C/C++ (the most common language used to

write programs for parallel processing), because

OrchestrateTM handles them. As more applications of the

new technology are implemented through the use of

OrchestrateTM and other Torrent products, more analyses

of large databases will be done. Another product that uses

the ATP-funded technology is Orchestrator for the SAS

SystemTM, recently released by the SAS Institute.

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

OrchestrateTM in a typical data warehousing application.

OrchestrateTM 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 file of about 13 million

records, which was then merged with a demographics file of about 16 million records. When the test was run without

... a component software system

that allows programmers to build parallelprocessing systems without needing to

explicitly understand how the system

exploits the hardware.

using parallel processing, the application took 32.5 hours on a machine using four processors. With OrchestrateTM,

the application took only 9 hours. When the number of

processors was increased to 12, the OrchestrateTM-based

application finished in just 3 hours.

Torrent also entered partnerships in September 1997

with three new software vendors: The MEDSTAT Group,

. . . this technology . . . is embodied in

industrial strength computer programs

used in diverse industries and by

government agencies.

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 creat- ed 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,

near-startup companies, cash-flow concerns 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.

TORRENT SYSTEMS, INC. 193
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 soft- ware in a user-friendly way. Without the ATP funds,

Torrent officials say, it is doubtful that the technology

could have been successfully developed at all. 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, 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.

194 TORRENT SYSTEMS, INC.
INFORMATION TECHNOLOGY

UNION SWITCH AND SIGNAL, INC

On Time with Rail-Traffic

Optimization Technology

aver 80 percent of raw materials and goods travel by rail at some point during shipment. Rail transport is prone to

unexpected delays caused by routing conflicts, accidents, and power outages that inconvenience passengers and impair

shipments between suppliers, manufacturers, and retailers. These delays play havoc with just-in-time delivery that manufacturers and distributors use to keep inventories low, and can increase costs.

Punctuality is equally important for passenger trains: delays are a primary barrier to increasing ridership. And because passenger and freight trains share 95

percent of the same track miles, any delay can affect much of the rail system.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * *

Problems with Existing Optimization Approaclies

Traditional optimization software employs a linear decisionmaking process whereby a single solution is reached.

Traditional optimization techniques generally seek a single

solution, such as maximizing profit or reducing cost. Each

change in the environment (e.g., train delays or equipment

fault) triggers the optimization system to start again from

scratch to search for a new solution. This approach is both

time-consuming and unrealistic for effective use in planning real-time train movement. In contrast, standard planning of train movement requires several objectives to be

addressed simultaneously, e.g., minimizing the cost of crews and minimizing lateness.

Union Switcli and Signal Company Sees

Opportunity in University Research

Prior to applying to the ATP, Union Switch and Signal,

Inc. (US&S), a leading supplier of equipment to the

railroad industry, was working with a Carnegie Mellon

University (CMU) research team on technology for

improving the safety and viability of railroad equipment.

In that process, US&S became familiar with optimization

US&S saw an opportunity to

build on tine researcli by CMU to breal<

ttiroughi tine teciinical ctiaiienges of

optimization for raii traffic sciieduiing.

Better tools for railway traffic planning could improve the rate of

on-time arrivals.

research that was going on at CMU. US&S saw an opportunity to build on the research by CMU to break through

the technical challenges of optimization for rail traffic scheduling. The optimization research underway at Carnegie Mellon was referred to as the "Asynchronous

Teams, or A_Teams technology." Shortly after discovering

the A_Teams work at Carnegie Mellon, US&S invited

Sarosh Talukdar, a CMU professor of electrical and

UNION SWITCH AND SIGNAL, INC. 195
PROJECT HIGHLIGHTS

PROJECT:

To adapt and extend a distributed multiagent-based optimization technology

developed by Carnegie Mellon University (CMU) for use in railway traffic

planning.

Duration: 1/15/95-1/14/97 ATP Number: 94-01-0063

FUNDING (in thousands):

ATP $2,000 67%

Company 967 33%

Totai 2,967

ACCOIVIPLISHIVIENTS:

US&S researchers, working closely with university researchers at CMU,

adapted and extended a technology to simulate real-time movement

planning for railroads. The project: I developed the basic tools and knowledge needed to construct and implement a better optimization system for railroad use; I developed two different software programs which implement the

technology: Real-time Central Traffic Controller, a real-time movement

planning software; and Offline Railroad Operations Planner, software

allowing railroads to evaluate alternative track layouts and routing plans; M secured funding from a class 1 railroad (one of the six largest North

American railroads) to pilot-test the technology; and H achieved a potential 50 percent improvement in rate of on-time arrivals

over the use of traditional command-and-control software.

COIVIIVIERCIALIZATION STATUS:

Efforts by US&S to commercialize work on the optimized traffic planner

were focused on two software packages, each with specialized applications:

the Real-time Central Traffic Controller and the Offline Railroad Operations

Planner. The Real-time Central Traffic Controller is intended to provide

optimized routing plans to central office controllers. The Offline Railroad

Operations Planner provides recommendations that can increase the capacity

and throughput of a railroad line, e.g., it can identify a bottleneck in a railway

line and suggest solutions to increase throughput at the trouble spot. The

software has performed well in pilot tests conducted in collaboration with a

railroad, but had not been commercialized as of the time of the study.

OUTLOOK:

The commercialization of the two software packages is contingent on the

ability of US&S to enter into cooperative development arrangements with

prospective railroad customers. These customers can provide necessary data

to perform additional tests and funding to support continued development

of the software. There are several factors supporting a favorable outlook for

commercialization: two software programs have been developed; the initial

test results were strong; and the railroad companies have demonstrated interest. At the time of the study, however, uncertainties remained about the willingness of the railroad companies to provide the necessary follow-through

support for commercialization.

Composite Performance Score: -Ar -k

COIVIPANY:

Union Switch and Signal, Inc.

1000 Technology Drive

Pittsburgh, PA 15219

(Parent Company: Ansaldo Signal, the Netherlands)

Contact: Dr. Frank Boyle

Phone: (412)688-2400x3511

Subcontractor: Carnegie Mellon University

computer engineering, to its offices to learn about potential applications of A_Teams technology to rail traffic planning. A-Teams offered a number of attractive features over

traditional optimization approaches.

A_Teams technology employs multiple software agents.

The agents are autonomous pieces of software that incorporate decisionmaking programs, memory, and the ability

to communicate with each other. These agents work

together as a team, each contributing its individual problemsolving expertise to provide solutions. The agents operate on a population of solutions, continuously improving the

population by altering the solutions and then evaluating

each solution against the rest of the population.

One advantage of A_Teams is that it allows optimization to be divided up into many subtasks—each of which

is addressed by teams of agents, allowing for alternative

schedules to be determined more rapidly. The flexibility

of operations and adaptable architecture help to break up

the optimization problem into agent subtasks. Thus, the

A_Teams technology enables the handling of more complex problems than the existing technology can handle.

In the case of railroads, this might include routing more

trains over more tracks, whereas traditional movement

planning systems are able to plan the movement of only one train at a time.

Another advantage of A_Teams is that it enables

more rapid adaptation to alternative schedules because of

changes in the environment (e.g., a track blocked by an

accident) and does not require a total reassessment. Teams

of agents react to local changes and make appropriate

adjustments, testing the new solution by comparing it with

the existing pool of solutions. In addition, the A_Teams is

a modular approach, which allows networks to be upgraded and modified merely by changing the population of

agents. This is important because incompatibility between

different generations of software has been a particularly

troublesome problem for railway decision-support software: upgrading has meant the complete replacement

of software systems.

The university's modular problem-solving software

appeared to offer potential for railroad routing, but not

without additional research. US&S wanted to exploit the

196 UNION SWITCH AND SIGNAL, INC.
opportunity, but lacked the internal resources to mount

the required research effort alone.

With ATP's Support, US&S Adapts and

Extends the A_Teams Approach

In 1995, the Advanced Technology Group (ATG), an R&D unit of US&S, proposed a research project to adapt

and extend the A_Teams approach to make it suitable for

rail traffic planning. The proposal scored high in technical

and economic merit, and US&S received a $2 million

award for research from ATP. The company contributed

a cost share of $967,000 to the project.

The technical goals of the project centered on developing a distributed optimization approach to railroad routing, and adapted and extended Carnegie Mellon's

A_Teams modular problem-solving approach. The

research had three major components: 1) decomposing a scheduling problem into subtasks to be pursued by agents,

2) developing a messaging protocol for communication

among subtasks, and 3) specifying programming agents

to respond to information received.

Technical Goals Reached

Researchers at US&S made substantial progress in developing the necessary infrastructure. They developed the

basic tools and knowledge needed to construct better

A_Teams systems, including libraries of code needed for

agent construction, mathematical optimization models,

system components, and application interfaces to allow

components of the system to work together.

The simulations demonstrated a

50 percent improvement in the

rate of on-time arrivals. .

.

Researchers at Carnegie Mellon University were contracted to investigate potential organizational designs for

individual A_Teams software agents and groups of agents.

In addition, they provided expert advice on how the system

could be designed to allow software agents to communicate

with each other in real time.

Pilot Testing on Trains

Efforts by US&S to commercialize work on the optimized

traffic planner are focused on two applications. The "Realtime Central Traffic Controller" is software for real-time

movement planning that is intended to provide optimized

routing plans to central office controllers. The "Offline

Railroad Operations Planner" is simulation software that

will allow railroads to evaluate alternative track layouts

and routing plans. It provides recommendations that can

increase the capacity and throughput of a railroad line. For

example, it might identify a bottleneck in a railway line

and suggest laying double track to increase throughput at

this trouble spot.

...US&S was seeking to form

cooperative development alliances

with class 1 railroads.

Toward the end of the project, funding was secured

from a class 1 railroad (one of the six largest North

American railroads) to pilot-test the technology. US&S

researchers performed simulations of real-time movement

planning using data from the railroad, including typical

schedules, track layout, speed limits, and patterns of

movement (e.g., periods of acceleration and deceleration).

The simulations demonstrated a 50 percent improvement

in the rate of on-time arrivals, a key performance goal,

when compared to the performance of traditional command-and-control software.

Unfortunately, the railroad company that was supporting the pilot-testing was acquired by another railroad company, and its new management, preoccupied with consolidation, discontinued support for the project. The company's management has since reconsidered its decision, and,

at the time of this study, was negotiating a new arrangement with US&S. In addition, US&S at that time was

seeking to form cooperative development alliances with

other class 1 railroads.

UNION SWITCH AND SIGNAL, INC. 197

ADVANCED TECHNOLOGY PROGRAM

CHAPTER 6

Manufacturing
iIIii{{
MANUFACTURING

AMERICAN SUPERCONDUCTOR CORPORATION (ASC)

High-Temperature Superconducting

Coils for Electric Motor Efficiency

Ltarge electric motors of 1,000 horsepower (hp) or more are used in many applications across the U.S. economy. If more-efficient 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 moreefficient motors would decrease the need for electricity production, with

concomitant reductions in the burning of fossil fuels and in the resulting

air pollution.

r ^

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * * * *

Harnessing Superconductivity to Increase

Electric IVIotor 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 fol- lowed 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 delayeddevelopment schedule.

. . opportunities abound for reducing

electric energy use via applications

of the ATP-funded technology.

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

A 286 hp demonstration motor constructed by Reliance Electric with HTS windings supplied by ASC.

could realize important efficiency gains. To be able to build such motors required significant advances in 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 ATP-funded technology.

AMERICAN SUPERCONDUCTOR CORP. (ASC) 201
PROJECT HIGHLIGHTS

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' electricirv' consumption and save the country hundreds of millions of

dollars in energy costs each year.

Duration: 7/1/1992 — 6/30/1995 ATP Number: 9i-0i-0i46

FUNDING (in tliousands):

ATP $1,883 42%

Company 2.579 58%

Total $4,462

ACCOIVIPLISHIVIENTS:

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: H 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 Wind-and-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); M applied for eight additional patents for technologies related to the ATP project; B won Industry Week magazine's Technology of the Year Award in 1996; I won the 100 Award in 1996 from R&D 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; H 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.

CITATIONS BY OTHERS OF PROJECT'S PATENTS:

See Figure 6.1.

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.

Composite Performance Score: * * * *

COMPANY:

American Superconductor Corporation (ASC)

2 Technology Drive

Westborough, MA 01581

Contact: Joe Sollecito Phone: (508) 8364200

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 tecfinologies

related to ttie 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

Ttlis advance will reduce the motors

electricity consumption and save the

country hundreds of millions of dollars

in energy costs each year

202 AMERICAN SUPERCONDUCTOR CORP. (ASC)
Placing 1000 horsepower HTS motor coils into a cryogenic

cooling system.

a laboratory 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

. . . won Industry Week magazine's

Technology of the Year Award in 1996 . . .

devices from external electricity supplies. Although this is not the ultimate commercialization 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 year. An 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 waiting 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.

. . . electricity users are likely to

benefit from lower electricity costs

enabled by electricity producers ' use

of the new HTS motors.

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

Pole set and double pancacke HTS coils for 1000 horsepower

Reliance Electric motor.

AMERICAN SUPERCONDUCTOR CORP. (ASC) 203
PATENT TREE KEY

Original Patent Second Generation Patent

Third Generation Patent

Fourth Generation Patent

Fifth Generation Patent

Figure 6.1 Patent Tree for Project Led by American Superconductor

Corporation (ASC): Citations by Others of American Superconductor

Corporation (ASC) Patents

2000

1999

1998

1997

1996

6007230

Ohio Electronic Engravers

54829191

ASC

5390064

ASC

5525583

ASC#2

5585772

ASC#2

5581220

ASC#2

1995

204 AMERICAN SUPERCONDUCTOR CORP. (ASC)
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

The company expects to

demonstrate a commercial-scale

1,000-hp motor in 1999.

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 return 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.

AMERICAN SUPERCONDUCTOR CORP. (ASC) 205

MANUFACTURING

ARMSTRONG WORLD INDUSTRIES, INC.

New Materials for New-Generation

Thermal Insulation

rmstrong researchers planned to investigate tlie 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).

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.)

No Stars

Developing Super Insulating Materials

Although they were not able to fully 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.

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.

Researchers achieved more technical

success in their work on process

technology for the synthesis of aerogels.

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

equipment 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

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. Armstrong officials concluded that —

despite the remarkable insulating properties of the aerogels

ARMSTRONG WORLD INDUSTRIES, INC. 207
PROJECT HIGHLIGHTS

PROJECT:

To develop process technology for a new-generation insulation material based

on controlled morphology (structure) in order to achieve superior insulating

properties and associated energy savings. Duration: 8/1/1992 — 7/31/1995 ATP Number: 91-01-0146

FUNDING (in thousands):

ATP $1,868 41%

Company $2.650 59%

Total $4,518

ACCOMPLISHIVIENTS:

Armstrong researchers performed research in two 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: M "Preparation of High Porosity Xerogeis by Chemical Surface

Modification"(No. 5,565,142: filed 4/28/1993, granted 10/15/1996); I "Thermally Insulative, Microporous Xerogeis and Aerogels"

(No. 5,525,643: filed 7/28/1995, granted 6/11/1996); and I "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).

CITATIONS BY OTHERS OF PROJECT'S PATENTS: See Figure 6.2

COMIVIERCIALIZATION 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.

Composite Performance Score: No Stars COIVIPANY:

Armstrong World Industries, Inc.

Innovation Center

2500 Columbia Ave.

Lancaster, PA 17603

Contact: Stephen C. Davis Phone: (717)396-5643

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's initial excitement over

the potential of aerogels for the

structural market dimmed.

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 technology 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. 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 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 toward 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.

The company has decided to license the

three aerogel process patents to potential

suppliers, and not to be in the aerogel

manufacturing business itself

208 ARMSTRONG WORLD INDUSTRIES, INC.
PATENT TREE KEY

Original Patent Second Generation Patent

Third Generation Patent

Fourth Generation Patent

Fifth Generation Patent

Figure 6.2 Patent Tree for Project Led by Armstrong World Industries,

Inc.: Citations by Others of Armstrong World Industries, Inc. Patents

6013187

Dow Corning

2000

1999

1998

1997

5762829

Armstrong.

5565142

Armstrong

5525643

Armstrong

1996

ARMSTRONG WORLD INDUSTRIES, INC. 209
1i

(iiiiiIIIIii{{I
AUTO BODY CONSORTIUM

(Joint Venture, formerly 2mm Auto Body Consortium)

A Systems Solution to a Quality

Problem in Auto Body Manufacturing

just 'ust 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 body-in-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.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * * *

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 mainte- nance 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

The project has published a manual for

use in extending the procedures

developed during the project.

materials, increased production time, and lost sales. While

European automakers 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 variation.

But with completion of ATP's "2mm Project" in 1995,

American automakers 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

Assembly plant staff members monitor operations using real-time

analysis tools developed in the ATP project.

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

AUTO BODY CONSORTIUM 211
PROJECT HIGHLIGHTS

PROJECT:

To develop improved measurement technology and process control needed

to achie\'e tighter fit — 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 43%

Companies 6.048 57%

Total $10,535

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:

M 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; M reduced production costs by $10 to $25 per vehicle at two plants initially

adopting the technolog\', 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; I reduced expected future maintenance costs by an estimated $50-$100

per vehicle; H published several papers in professional journals; M published TAe Capture and Communication ofKnowledge: A Lessons-Learned

Approach, a manual that will speed the adoption of the technologies

and processes developed during the ATP project by showing how to implement them; B worked with the University of Michigan to begin transferring the technology to other GM and Chr\'sler assembly plants beyond the original five,

implementing it thus far in 22 plants in the United States and Canada; I 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 I provided member auto assembly companies a quality peg on which

to hang marketing literature — Chr^'sler highlights the fact that its new

Concorde "literally has a two-millimeter body."

COIVIIVIERCIALIZATION 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 6 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 estimated to ha\'e already been achieved using the new approach, meaning millions of dollars saved per year. Higher-quality

vehicles from these plants are becoming available to consumers, 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 oudook 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 hkely 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 automoti\'e and related

industries by more than $3 billion in 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.

Composite Performance Score: * * *

COIVIPANY:

Auto Body Consortium

(joint \'enture lead; formerly 2mm Auto Body Consortium)

2901 Hubbard Road Ann Arbor, MI 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

costs less the cost of implementing 2mm technologies) by

$10 to $25 per vehicle in plants where they have been tested. When full 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 $160 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 helped smalland medlunri'Supptier 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.

212 AUTO BODY CONSORTIUM
The computer display for one of the many diagnostic procedures provided by the new dimension control system.

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.

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 one 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 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 medium-size companies that

provide tooling and engineering services for auto body

assembly lines), two big auto manufacturers (Chrysler 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

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

1 of the 1 1 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 automakers fearful 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 the 2mm Project, and automakers have

been reluctant to fund research by their suppliers. The

fact that development risks were unevenly born by consor- tium member firms was another obstacle that ATP participation helped to overcome.

. . . 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.

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

AUTO BODY CONSORTIUIVl 213
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 6 of 10 Chrysler plants and 16 of 31 GM plants

in the United States and Canada, and it is being transferred to the remaining GM and Chrysler plants and to Ford Motor Company through the supplier chain.

214 AUTO BODY CONSORTIUM
MANUFACTURING 5

E.I. DU PONT DE NEMOURS AND COMPANY

Thallium/Lead Thin Films for Advanced

Superconducting Electronic Devices

wperconductivity 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.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * * *

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.

approach with simultaneous sputtering and annealing.

Photolithographic and ion-milling techniques are used

to form circuits and other electronic features in the films.

The viability of the two processes was demonstrated by

constructing and testing several basic electronic components, including oscillators, filters, mixers and coplanardesigned transmission lines.

, . . HTS component technology recognized

as one of the "Top Products of 1993"

by Microwaves & RF magazine . . .

. . . continuation of

its HTS research hinged on

receiving an ATP award . . .

With its ATP award, DuPont developed thin-film

HTS fabrication technology. It is generic enough to use with a variety of HTS materials that have form,

structure, and performance 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 single-step

IVIany New and Potential

HTS Products

DuPont has developed six electronic-component 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 developed in the ATPfunded 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 customer specifications.

The company has begun substantial marketing efforts

and is successfully selling products. Most of these are made with erbium/barium and thallium/barium rather than

thallium/lead. Applications requiring the higher operatingE.l. DU PONT DE NEMOURS AND COMPANY 215
PROJECT HIGHLIGHTS

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 784 33%

Total $2,374

ACCOMPLISHIVIENTS:

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: H published more than 20 research papers on the technology in

professional journals; M had its HTS component technology recognized as one of the "Top

Products of 1993" by Microwaves &RF magazine in December 1993; B 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 M worked with a small equipment-supplier company to develop improved

HTS thin-film fabrication equipment.

COIVIIVIERCIAUZATION STATUS:

The market for new products based on the fabrication 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.

Composite Performance Score: if

COIVIPANY:

E.I. du Pont de Nemours and Company

RO. Box 80304

Wilmington, DE 19880-0304

Contact: Dennis J. Kountz

Plione: (302) 695-4256

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.

. . . published more than 20 research

papers on the technology

in professional journals . . .

. . . this technology . . . could make magnetic resonance imaging and terrestrial and

satellite communications less expensive

and more efficient to operate . . .

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 reso- nance imaging (MRI) equipment 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.

Less-Costly, More-Efficient Electronic Equipment

HTS processes developed in the ATP project could make

superconductivity-based equipment 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 stan- dard MRI device. In addition, the use of HTS electronics

enables equivalent or better MRI performance 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 one216 E.I. DU PONT DE NEMOURS AND COMPANY
sixth those for currently available competitor machines

that use low-temperature superconducting 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 accrue 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.

... a small equipment supplier,

the Kurt J. Lesker Company . . . improved

fabrication equipment . . .

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.
i
HELPMATE ROBOTICS, INC

(formerly Transitions Researcli Corporation)

Robot Navigation Technology

Dbots are frequently seen as exotic, make-believe objects in science fiction movies. They walh;, tali<, 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 dangerous 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.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * *

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

magazine 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

environment. And with other funding, it has built them.

This advance, set on the technical foundations laid by

robotics pioneer and company CEO Joseph Engelberger,

has helped to expand the use of mobile robots throughout

the country.

They do work too tedious or dangerous

for humans, enduring tedium without

erring and danger without harm.

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

Drugs are loaded on the HelpMate robot by a hospital pharmacist

for delivery to staff in one of the hospital's wards.

HELPMATE ROBOTICS, INC. 219
PROJECT HIGHLIGHTS

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 taking alternative routes if a

path is blocked. 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 44%

Company 875 56%

Total $1,574

ACCOIVIPLISHMENTS:

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: I the company incorporated the new navigation capabilities into its

original HelpMate robot and is now producing and selling the

upgraded version; I HelpMate raised $6 million through an initial public stock offering in

1996, and used it to build production and sales capabilities. (A second

offering did not go through, and the company temporarily downsized

in 1997. New funding commitments are expected to rebuild staff and

marketing.);

H the upgraded HelpMate robot was named one of 36 finalists in the

Discover magazine competition for technology of the year for 1996;

H CEO Joseph Engelberger, the principal investigator for the ATP project,

received the Japan Prize in "systems engineering for an artifactual envi- ronment" in 1997 from the Science and Technology Foundation of Japan; H the company and Otis Elevator entered into an alliance in which Otis

is to be the exclusive distributor of HelpMate hospital robots in Europe.

COIVIMERCiALlZATION STATUS:

Robots incorporating the new navigational technology have been rented or

sold to about ICQ hospitals in the United States and Canada, and the company has entered marketing arrangements 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.

Composite Performance Score: * *

COIVIPANY:

HelpMate Robotics, Inc.

(formerly Transitions Research Corporation)

Shelter Rock Lane Danbury,CT 06810-8159

Contact: J.E Engelberger

Phone: (203) 798-8988 Number of employees: 27 at project start, 14 at the end of 1997

many different sources and recognize light-shading

differences. They have to be trainable (programmable).

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."

HelpMate Robots are delivering

medicines, supplies, prepared food,

x-ray images and other material in

about 100 hospitals in the United

States and Canada.

Specifically, HelpMate researchers successfully developed an improved light direction and range (LIDAR)

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 environments — places with

predefined components such as doorways, light fixtures,

windows, and 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.

220 HELPMATE ROBOTICS, INC.
HelpMate plans to expand the use of

the ATP-funded technology by developing

robots that can assist infirm and

elderly persons at home.

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.

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 delivery 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

delivery, but it is also frequently more reliable, according

to hospital officials, because of fewer delivery mistakes.

Robots to Serve tlie 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

Two 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 applications 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 con- taminate the superclean rooms where chips are fabricated.

Two industrial applications currently being

explored are in computer chip fabrication

and clinical laboratory work.

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.

HELPMATE ROBOTICS, INC. 221
1
MANUFACTURING

ILLINOIS SUPERCONDUCTOR CORPORATION (ISC)

Using High-Temperature Superconductivity

to Improve Cellular Phone Transmission

T.he 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 cellular 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 customer service will be affected when

a signal shifts from one station to the next while the

customer is traveling.

Cellular phone users will receive

clearer signals and suffer fewer dropped

calls as their signals nnove from one

base station site to the next.

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

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 superCOMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * * *

A compact one-box enclosure for RangeMaster® and SpectrumMaster®

ILLINOIS SUPERCONDUCTOR CORPORATION (ISC) 223
PROJECT HIGHLIGHTS

PROJECT:

To develop high-temperature, superconducting thicit-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 tliousands):

ATP $1,980 56%

Company 1.555 44%

Total $3,535

ACCOIVIPLISHIVIENTS:

ISC developed and demonstrated a robust fabrication process to produce

radio-frequency (RF) components using thick-film, high-temperature superconductivity (HTS) technology. It developed a model that predicts the

impact of high-performance filters on future digital wireless systems. The

company also: M 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); U applied for one additional patent for technology related to the ATP project;

U raised $17.4 million through an initial public stock offering in

October 1993; I completed construction of a plant to manufacture RF filters and related products; M began selling SpectrumMaster® in 1996 and RangeMasterTM

in 1997, both of which are based on the ATP-funded technology;

H received the Microwave & RF magazine 1996 Top Product Award for "cellular phone site filters, superconducting ceramics," which were selected

from a field of 5,000 new products; and U received (with subcontractor Lucent Technologies) a Corporate

Technical Achievement Award for 1997 from the American

Ceramic Society.

CITATIONS BY OTHERS OF PROJECT'S PATENTS:

See Figure 6.3.

COMIVIERCIALIZATION 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.

Composite Performance Score: -k if^

COIVIPANY:

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

. . . received the Microwave & RF magazine

1996 Top Product Award for "cellular phone

site filters, superconducting ceramics "...

conductivity (a phenomenon discovered in 1986) to

significantly improve the quality of signal transmission.

Superconducting components offer great benefits to

cellular phone communications, including improvements

in range, receiver sensitivity, and frequency stability.

These improvements, in turn, will extend the range 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-frequency (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 problem 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 superconducting 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 particular operator. Investigation of the cellular market indicated that the superconducting preselec224 ILLINOIS SUPERCONDUCTOR CORPORATION (ISC)
tor receive filter was of greatest interest to customers in

terms of improving system performance. 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 resonance imaging machines and other components of communications systems.

ISC successfully incorporated the ATP-funded technology in a preselector receive filter and, in late 1996,

started selling it under the name of SpectrumMaster® to companies 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 16 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

technology to help communications companies serve their

customers with greater-quality services at lower costs.

Cellular phone service companies can reduce the number

of new base station sites they install. They can also

A ceramic torroid

form, coated with

thick film HTS material, designed to resonate at a specific

frequency.

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 transmit 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.

By September 1997, ISC had installed

SpectrumMasterTM or RangeMasterTM

in 22 base stations in 12 cities and

had successfully completed 16

field trials in 10 cities.

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 ATP-funded 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

ATP Award Accelerates Development

Funding from the ATP enabled ISC to form alliances

with research partners and contractors and to achieve its research and development 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 turn, 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 the number of sites

required to cover the area.

ILLINOIS SUPERCONDUCTOR CORPORATION (ISC) 225
PATENT TREE KEY

Original Patent Second Generation Patent

Tliird Generation Patent

Fourtli Generation Patent

Fiftli Generation Patent

Figure 6.3 Patent Tree for Project Led by Illinois Superconductor

Corporation: Citations by Others of Illinois Superconductor

Corporation Patents

2000

1999

1998

1997

5682128

ISC :

5527765

ISC 1996

226 ILLINOIS SUPERCONDUCTOR CORPORATION (ISC)
MANUFACTURING

MICROELECTRONICS CENTER OF NORTH CAROLINA (MCNC)

Electronic Muscle: Advanced

Microelectromechanical Systems

AJthough electricity has been used to do work and make our lives easier for over 100 years, the technology

that converts electrical current to mechanical force has evolved little in the last century. Electric motors, sensors,

circuit breakers, and almost all electromechanical devices utilize magnetic fields to create motion from the flow

of an electric charge. While machines in general have become smaller

per unit of power and more technically efficient, magnetic-based power

sources still require large mass and high currents.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.)

Integrated Force Arrays (IFAs)

One potential improvement in this area utilizes the attraction of objects with opposite charges to create motion.

The phenomenon, known as electrostatics, is similar to the

static cling of a sock to a towel coming out the clothes

dryer. Tiny devices using electrostatics convert these electrical charges into precise motion. Combinations of the

tiny devices offer the possibilities of larger devices capable

of exerting significant force, so-called integrated force

arrays (IFAs).

Made up of millions of microscopic cells, the IFA

resembles a thin, flexible, plastic membrane. IFAs are part

of a group of technologies called microelectromechanical

systems (MEMS). Ranging in size from micrometers to

millimeters, MEMS are currently used to sense, control,

and actuate in such devices as optical scanners, fluid

pumps, and pressure and chemical flow sensors.

Combinations of tlie tiny devices

offer tine possibilities of larger devices

capable of exerting significant force,

so-called integrated force arrays (IFAs).

An IFA can be thought of as analogous to muscle tissue:

when an electric signal is sent to the array, it contracts like

a muscle, causing displacement and movement. The way

This tiny IFA membrane

contains more than

100,000 cells, or

building blocks.

this works is that each cell has two conducting sides; when

they are charged to opposite electrical polarities, they are

attracted like opposite poles of a magnet. Thus, when

voltage is applied, the membranes on the individual cells

contract, causing the muscle (the IFA) to shrink about 30

percent in length. The motions created are precisely controllable, and the mass of the device can be about three

orders of magnitude less than that of a magnetically driven

solenoid of equivalent power.

IFAs are more durable and lighter than their electromagnetic MEMS counterparts currently in use. They also use less power and can be positioned with more precision

than existing mechanisms that create motion from electricity. Although IFAs appear to offer great advantages in principle, processes for making them with large forces and at low cost have yet to be fully developed.

MICROELECTRONICS CENTER OF NORTH CAROLINA 227
PROJECT HIGHLIGHTS

PROJECT:

To develop a muscle-like microelectromechanical technology based on

electrostatically driven structures called integrated force arrays.

Duration: 6/15/92 - 6/14/95 ATP Number: 91-01-0258

FUNDING (in thousands):

ATP $1,206 67%

Company 593 33%

Total $1,799

ACCOMPLISHIVIENTS:

The research conducted by MCNC was successful in meeting many of

the project's technical goals. Specifically, the researchers: H produced several IFA working prototypes with desirable force outputs; M fabricated IFAs of polyimide coated with chromium and gold that

were considerably lighter than previous electric mechanisms; M published eight articles in refereed journals, and also in conference

proceedings and professional society reports; and M applied for and were granted three patents:

"Fabrication method for microelectromechanical transducer"

(No. 5,290,400: filed 12/17/1992, granted 3/1/1994);

"Pleated sheet microelectromechanical transducer"

(No. 5,479,061: filed 12/31/1992, granted 12/26/1995); and

"Unidirectional supporting structure for microelectromechanical

transducers"

(No, 5,434,464: filed 5/23/1994, granted 7/18/1995).

CITATIONS BY OTHERS OF PROJECT'S PATENTS: See Figure 6.4.

North Carolina Research Center

Proposes Project to ATP

Researchers at the Microelectronics Center of North Carolina (MCNC) saw substantial opportunity in IFAs as an

enabling technology. They aimed to create an IFA with

millions of cells that together would generate linear contractions with high force ratios. IFAs fabricated from lightweight polyimide, coated with a combination of gold and

chromium, could fit more easily into machines, which

would not need to be designed to accommodate the mass

and heat dissipation requirements of bulky, heat-generating electric motors. Smaller IFAs could be used in micromachines that utilize its high power-to-weight ratio over

small distances and loads. And, if the technology could

be pushed far enough, artificial muscle for prostheses might even be possible.

In 1992, the Microelectronics Center of North

Carolina (MCNC) proposed a two-stage, three-year project

to the ATP. The first stage was to develop prototype IFA

COMMERCIALIZATION STATUS:

Although the laboratory work to build the first large integrated force array was largely a technical success, the near-term effort for commercialization has been unsuccessful to date. Potential investors have been concerned about

the reliability and cost-effectiveness of production processes for large-scale IFA devices. As a result, MCNC has been unable to attract businesses

willing to use IFAs in commercial production.

OUTLOOK:

Although IFA technology continues to be in the early stage of development, numerous applications are envisioned in the future. Potential uses include

data storage actuator arms, biomedical devices, robotics, biomechanical prostheses, and optical shutters. The most promising of these applications in

the near term is use of IFAs for secondary actuators for the reader arm of

disk drives. The dissemination of the research knowledge gained by the ATP project should pay dividends for years to come as the microelectronics machine industry continues to grow and businesses become willing to use

IFAs commercially. While the outlook for widespread commercial use of

the technology in the near term is weak, the outlook further in the future

is strong.

Composite Performance Score: -k

COMPANY:

MCNC

3021 Cornwallis Road

Research Triangle Park NC 27709-2889

Contact: Dr. Scott Goodwin-Johansson

Phone: (919) 248-1964

arrays using common very large-scale integration (VLSI)

fabrication techniques. In the next phase of the project,

MCNC proposed to develop larger scale and more eco- nomical methods of IFA production with the potential

of building more powerful and useful IFA devices with

potential future applications in fields ranging from robotics

and biomedicine to computer data storage. It was a long

reach, but one they hoped would bring IFA technology

into actuality.

And, if the technology could be pushed

far enough, artificial muscle for

prostheses might even be possible.

Founded in 1980, MCNC began as a private, nonprofit corporation that brought together partners in industries,

research universities, and state government to encourage

228 MICROELECTRONICS CENTER OF NORTH CAROLINA
research, education, and development of electronic information technologies. Today, the nonprofit center collaborates with companies worldwide in a range of microfabrication and related technology programs.'

Successful Prototypes Developed

During the ATP project, MCNC scientists were able to produce several tiny working prototype IFAs with desired

force outputs. They built an IFA actuator that weighed

about 60 micrograms, and exerted a force of 12 dynes

(enough to push a large sugar cube over a 0.7-millimeter

range). While microscopic, these IFAs have proved both

powerful and durable: the work-to-volume ratio for the

IFA was among the largest reported in the MEMS literature, and cycle lifetimes of over 10 billion contractions

have been measured.

They built an IFA actuator that weighed

about 60 micrograms, and exerted a force

of 12 dynes (enough to push a large sugar

cube over a 0. 7-millimeter range).

IFA Commercialization Awaits

Further Development

The success in the laboratory—building the first largescale (although still microscopic) arrays—was significant.

But at the end of the project, the process technology was

not considered by businesses sufficiently robust to entice

them to invest in new product development. Companies

have seemed interested in the technology but have been

...at the end of the project, the process

technology was not considered by businesses sufficiently robust to entice them

to invest in new product development.

At the conclusion of the ATP program, MCNC made

numerous contacts within the magnetic disk drive industry

to explore the use of IFAs for secondary actuators. In this

application, they had the capability of increasing hard

drive storage capacity and data reading rates. The short

product cycle of this industry, however, led it to prefer

commercially available technology that is ready for immediate inclusion into a new product. The IFA was not at

that stage of development, and these attempts failed to

lead to commercial development of the IFA. The disk

drive industry, however, has shown interest in exploiting

such a technology when larger-scale IFAs can be produced

by more cost-effective methods.

Interest in IFAs Continues

MCNC subsequently developed several concepts for

fabricating thicker, stronger, and more robust IFA structures. At the time of this study, however, MCNC had

continued to be unable to secure additional private

sector funds to demonstrate these fabrication methods.

The work, however, has continued to attract government and university attention, as well as research groups

in companies. MCNC entered into two contracts with the

U.S. military to verify the results of the ATP program and

to examine new methods for low-cost fabrication of IFAs.

Since late 1999, MCNC has been working on a new DOD

contract to explore two of the proposed concepts for

MCNC entered into two contracts with the

U.S. military to verify the results of the ATP

program and to examine new methods for

low-cost fabrication of IFAs. At the time of

the study MCNC was also working with

Duke University on a National Institutes

of Health (NIH) contract to fabricate IFAs

for an ultrasound scanner.

hesitant to license IFAs from MCNC without further test- ing and development. Potential investors have continued

to express concern over the capability to produce largescale devices in quantity, both reliably and cost-effectively.

fabricating the IFA in larger, more robust structures. MCNC expects to fabricate prototypes in 2002. At the

time of the study, MCNC was also working with Duke

University on a National Institutes of Health (NIH)

contract to fabricate IFAs for an ultrasound scanner.

' Nonprofit institutions, such as MCNC, were eligible to apply to ATP as single applicants only in the first two years of ATP's operation.

MICROELECTRONICS CENTER OF NORTH CAROLINA 229
h Original Patent

^ Second Generation Patent

9 Third Generation Patent

Fourth Generation Patent

Rfth Generation Patent

Figure 6.4 Patent Tree for Project Led by IVIicroeiectronics

Center of North Carolina: Citations by Others of

Microelectronics Center of North Carolina Patents

2000

1999

1998

1997

1996

5479061 ^^^^H 5434464

UNC/MCNC ^^^H MCNC

1995

5290400

MCNC

1994

230 MICROELECTRONICS CENTER OF NORTH CAROLINA
Patents and Publications Spread

Research Knowledge

There has been a relatively rapid and diverse dissemination of knowledge from this ATP-sponsored technology.

MCNC and its scientists have been granted three IFArelated patents. As illustrated by the patent tree for this

project in Figure 6.4, the knowledge gained from the

research has begun to spread to other companies and

researchers through extensive citing of MCNC's patents

by others. Companies and research groups as diverse

as Honeywell, Texas Instruments, Cornell Research

Foundation, and Siemens, all have cited the MCNC

patents developed during the ATP project.

In addition MCNC and its research scientists have

spread the knowledge gained from their ATP-sponsored

research through publications. As of May 1997, eight

refereed journals, including the Journal ofMicroelectromechanical Systems and Micromachining andMicrofabrication, had published articles resulting from the project.

Conference and professional society proceedings provided

other avenues through which the research results were

disseminated.

Growing Interest in MEMs

MCNC has helped raise the visibility of MEMS devices in

the scientific and engineering community. After the ATP

project, MCNC created a MEMS Technology Applications

Center, jointly funded by the state of North Carolina, the

Defense Advanced Research Projects Agency (DARPA),

and several large corporations. The MEMS Technology

Center focused on developing low-cost fabrication techniques for the development of MEMS devices, including

IFAs, for practical applications. In April 1999, MCNC spun

off its MEMS business unit into a new company, Cronos

Integrated Microsystems, Inc., subsequently bought by

JDS Uniphase in April 2000. Although the IFA technology

did not go to Cronos (this follow-on effort), the ATP-funded IFA project boosted interest and proved that the technology concepts were valid. Although the ATP project did

not take the development of IFAs to the point that private

capital alone would take them into commercial development, the ATP investment brought the technology a step

closer to realization and helped speed progress in a wide

range of MEMS devices.

What Does the Future Hold?

Although IFA technology continues to be in the early

stage of development, numerous applications are envisioned within the next five to ten years, including secondary actuators for hard disk drives, robotics, optical shutters,

pumps, valves, and medical devices. A reverse technology

is also being developed, where force on the array would

cause a current to be generated. These might be used,

for example, to make sensors that produce a current when

they touch an object. This touch response could be used

in robotic sensing systems.' Similar reverse IFAs could

also generate power from a person's natural motions, thus,

for example, powering devices such as wearable computing systems. Having taken the IFA to its current state of

development, MCNC is now looking to customize the

technology for use in these and other MEMS applications.

^ MCNC website, February 1998, <http://www.mcnc.org>.

^ Solid State Technology, Vol. 36, No. 10 (October 1993), p. 36.

MICROELECTRONICS CENTER OF NORTH CAROLINA 231
IIIiIII

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PERCEPTRON, INC

Machines that See in 3-D

r

fan machines see? Not as well as a healthy set of human eyes, but well enough to do certain tasks.

Of course, machines at present don 't see using biological processes; rather they can be given a form of

sight through the use of digital cameras and other imaging devices used in conjunction with computer processing.

In fact, prior to recent advances in machine vision technology, machines

could only see in two dimensions (2-D), which meant seeing images as flat. COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * * *

Limitations of 2-D Vision

The flat images delivered by 2-D vision are adequate for

some industrial purposes, and several firms offer standard

2-D vision systems for use in a variety of markets, such as inspection for quality control of printed circuit boards.

Many automated tasks, however, require geometric spatial

information that can only be provided by three-dimensional (3-D) vision capability. This requirement for improved

vision with depth perception made the development of

affordable 3-D vision technology an important goal in

industrial automation. Affordable 3-D vision, for example,

is critical to complete automation of inspection tasks and

to achieving greatly improved performance of robot guid- ance tasks.

Teclinical Barriers to Affordable 3-D Vision

The recent advent of affordable 3-D imaging devices

hardware components of 3-D vision systems—brought 3-D

machine vision a step closer to realization, but the lack of

general-purpose 3-D vision software was recognized as a

serious technical barrier impeding further progress. Under

existing conditions, it was necessary to develop specific

software for each application, as well as customized

The high costs of customization have

limited the rapid adoption and diffusion

of 3-D machine vision technology.

Image processing

algorithms developed

in the project make it

easier to apply 3-D

machine vision

systems, such as

LASAR camera, to

see. The different

colors of the body

indicate depth

perception.

hardware to work with that particular software. The high

costs of such customization have limited the rapid adoption and diffusion of 3-D machine vision technology,

despite its large potential for making a wide variety of

manufacturing processes more reliable, less expensive,

and safer.

A Proposal to Overcome Technical Barriers

Perceptron, Inc., a small company in Farmington Hills,

Michigan, submitted a proposal to ATP's 1993 General

Competition with the goal of advancing 3-D machine

vision. Perceptron received $1,219 million in ATP funding. The company provided $865 thousand of its own

PERCEPTRON, INC. 233
PROJECT HIGHLIGHTS

PROJECT:

To create generic image processing algorithms—building blocks for costeffective 3-D vision software needed to make industrial machines "see"

better—as well as supporting test environment and hardware specifications.

Duration: 1/1/1994-3/31/96 ATP Number: 93-01-0071

FUNDING (in thousands):

ATP $1,219 58%

Company 865 42%

Total $2,084

ACCOIVIPLISHMENTS:

Perceptron met or exceeded its goals for the project. Among its

accomplishments, it: M developed image processing techniques and algorithms for developing

specialized vision software at lower cost; H constructed a test environment to test these techniques for use in a

range of different industrial applications; H specified the hardware standards to use these tools effectively and

inexpensively in an industrial setting; B developed an interface module that allows data generated by the

image processing techniques to be communicated between a range of

imaging devices and computing platforms used in industrial machine

vision systems; H published 12 technical papers in international conference proceedings

and international journals on image processing, pattern recognition,

machine vision and industrial automation; and I worked with Trident Systems to develop and install two robot guidance

systems using the machine-vision software advances for use in a lumber mill.

COIVIIVIERCIALIZATION STATUS:

The chief focus of Perceptron's efforts in software was robot guidance, which

demands a high level of recognition capability, also crucial to other applications such as measurement and inspection. Commercial applications of the new vision software technology have been demonstrated in a lumber mill

(where it has reduced timber waste) and to inspection of steel processing

furnaces (to achieve safety goals without increasing downtime). In addition,

it is feeding into a collaborative effort with Ford Motor Company on the development of robot guidance to automate the assembly of automobile

powertrains as part of an ATP project.

OUTLOOK:

Perceptron's software advances in the ATP project have highlighted the need

for improved imaging devices. At present, imaging devices must often be

customized, at considerable cost, to meet the precision demands of specific

applications. While the development of generic software techniques has

extended the range of cost-effective applications of machine vision, the costs

associated with the continued need for customization of imaging devices is a

remaining barrier that impedes the rapid, widespread applications of 3-D

machine vision.

Composite Performance Score: * * *

COIVIPANY:

Perceptron, Inc.

47827 Halyard Drive

Plymouth, MI 48170

Contact: Don Holtz

Plione: (734) 414-4842 Number of employees: at project start: 70; number of employees

at project end: 300 Subcontractors: ERIM International, a nonprofit research institute;

University of Michigan.

funds to mount the $2,084 million project. The focus was

on developing tools for general-purpose vision software.

More specially, the project aimed at developing stan- dard image-processing algorithms, a test environment for

testing, and compatible hardware standards that would

provide the basis for the development of a range of affordable machine vision products. These software tools, the

test environment, and the hardware standards could then

be made available to researchers and companies to push

the technology forward and develop applications for vari- ous industrial processes, such as automotive drive train

assembly and quality control inspections.

The Project Team

Perceptron subcontracted some of the project's research

to the School of Engineering at the University of Michigan

at Dearborn (UMD). At the time of the proposal, UMD's

Machine Vision Laboratory was engaged in several projects that involved using image analysis methods to solve

practical machine vision problems such as on-line inspection and parts recognition.

Perceptron subcontracted some of

the project's research to the School of

Engineering at the University of

Michigan at Dearborn (UMD).

Two months into the project, researchers from ERIM

International, a nonprofit research institute, joined the

project team — made up at the time of Perceptron and

University of Michigan researchers. ERIM, headquartered

in Ann Arbor Michigan, brought significant experience in

image-processing and laser radar systems. ERIM was

instrumental in the development of a standard test envi234 PERCEPTRON, INC.
ronment for testing image-processing algorithms and in

determining tiie hardware requirements for executing

these algorithms.

ERIM, headquartered in Ann Arbor

Michigan, brought significant experience in

image-processing and laser radar systems.

Perceptron brought to the research effort a background in producing machine vision systems for a number

of industrial applications. The company is primarily

engaged in the manufacture and sale of imaging devices.

Prior to this ATP project, Perceptron had developed a

general-purpose industrial measurement and inspection

system, called the PIOOO, which was based on laser triangulation. Also prior to this ATP project, Perceptron had

developed a scanning laser radar called the LASAR, which

was the only commercially available scanning laser radar

device at the time. This device provided a fundamental

advance in the use of machine vision for robot guidance.

Project Goals and Accomplishments

Perceptron, UMD, and ERIM researchers had four technical objectives in software and hardware development, centered on 1) image preprocessing, 2) image feature extraction, 3) testing, and 4) hardware standardization. The aim was to create a standard set of algorithms for 3-D imageprocessing and object feature analysis, and to demonstrate

the effectiveness of these algorithms in a test environment

that could simulate the demands of a variety of different

manufacturing applications. Such a test environment

would allow many different automation vendors to develop general-purpose 3-D vision software products. This

would in turn spur hardware production, resulting in widely available 3-D machine vision systems at affordable

prices. The advances were expected to make it much

more cost-effective to use automated systems in a variety

of industrial processes, thus enhancing U.S. manufacturing

competitiveness.

Perceptron reached all four of the project's technical

objectives. Most significantly, the objectives for software

tools were exceeded, with over 200 image processing algorithms developed. According to a company representative,

the ATP award accelerated progress towards accomplishing the goals by five years or more.'

Progress Toward Commercialization

The chief focus of Perceptron's subsequent efforts to apply project advances has been in robot guidance. Robot

guidance is considered a leading application of machine

vision technology because it demands a high level of

recognition capability. Technology which can meet the

stringent demands of robot guidance systems generally can move into other applications, such as measurement

and inspection.

Perceptron worked with Trident Systems, a systems

integrator, to develop two related machine vision systems

for use in Gulf States Paper Corporation's new $40 million

lumber mill in Moundville, Alabama. The first system

decides how to best cut logs crosswise into shorter lengths.

The second system calculates the mix of plank sizes that

will yield the least waste and most profit from each log.

Perceptron wori<ed with Trident Systems, a

systems integrator, to develop two related

machine vision systems for use in Gulf

States Paper Corporation 's new $40 million

lumber mill in Moundville, Alabama.

Perceptron also is applying project results in developing machine vision systems to inspect the lining of fur- naces used in steel processing. These systems would be

able to detect faults in the lining remotely while the fur- nace is still in operation. Currently, furnaces must be shut

down in order to examine the lining for faults pursuant to

safety regulations, resulting in substantial downtime and

loss of production.

Perceptron is building on the advances in software

from the machine vision project to develop prototype

automatic inspection devices for automobiles on assembly

lines. The company is collaborating with Ford Motor

Company as part of a new ATP project to use robot guid- ance applications in auto industry robotics.

A Remaining Impediment to a Generic System

Despite the technical advances in software and

Perceptron's progress in commercializing results from the

project, further improvement is needed to achieve a truly

generic machine vision technology. Before the project,

software capabilities lagged behind the capabilities of

' Interview with Don Holtz of Perceptron, November 28, 2000.

^ Flexible Robotic Assembly for Powertrain Application (FRAPA). ATP awarded funds to this project in October 1997.

PERCEPTRON, INC. 235
imaging devices then on tlie market, and the software was

considered the major technical barrier. Although the project made progress with software, it made little further

progress in the capabilities of imaging devices. By the

end of the project, the capability of existing imaging

devices was a remaining impediment.

By the end of the project, the

capability of existing imaging devices

was a remaining impediment.

The level of precision required for many of the actual

applications, including those currently being developed by

Perceptron, can only be achieved by customizing existing

imaging devices at considerable cost. The inability of

existing imaging devices to meet the demands of varied

applications without undergoing customization, limits the

ability of companies to take full commercial advantage of

the progress made in developing generic software under

the ATP project. Thus there is a need for further improvements in imaging devices, and improvements are now

being pursued.

Knowledge Sharing

Perceptron and UMD informed other researchers in the

machine vision and related industries of their research

findings through a number of published papers. The

research led to the publication of 12 technical papers in

international conference proceedings and technical journals on image processing, pattern recognition, machine

vision, and industrial inspection. Developments were also

shared with these industries through trade shows and communication to the Robotics Industry Association, regional

organizations such as the Industrial Technologies Institute

in Michigan (now the Michigan Manufacturing Technology

Center) and the Edison Industrial Systems Center in Ohio.

Gains in Industry Productivity and Safety

The development of general-purpose 3-D vision software

promises to make 3-D machine vision systems more costeffective for a number of industrial applications, which will

allow cost savings and increased safety. For example, the use of 3-D vision systems for robot guidance allows for

cost savings in dunnage, that is, the pallets, baskets, bins

and other containers or platforms from which parts are taken for use in industrial assembly. With the use of 3-D

vision systems, general-purpose dunnage can be used,

allowing firms to move more quickly from development

to production without the need to design specific dunnage

for each new project. Successful application of robot guid- ance in the forest products industry promises to decrease

waste substantially, allowing more lumber to be produced

from the same amount of timber. In steel processing, the

successful application of software advances to remote

inspection will allow safety goals to be met without

increasing downtime.

In steel processing, the successful

application of software advances to

remote inspection will allow safety goals

to be met without increasing downtime.

236 PERCEPTRON, INC.
PREAMP CONSORTIUM (JOINT VENTURE)

New Models to Speed the Development

of Electronics Components

J^rintei p.rinted circuit boards are ubiquitous. IVIost 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, airplanes, thermostats, automobiles, appliances, calculators, garage-door

openers, industrial controls, communications satellites, and numerous

^. . . COMPOSITE PERFORMANCE SCORE

Other devices. ,^ ^ , , , , (Based on a four star rating.)

Data Sharing Speeds Component Development

In this ATP project, the PreAmp consortium developed

common parts identifiers (a standard product model for

components) and fabrication procedures (a generic manufacturing process model for making components) that can be shared among producers 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.

These models will enable

true concurrent (simultaneous)

engineering of component design and

manufacturing processes . . .

PreAmp is a joint venture of the South Carolina

Research Authority (SCRA) and four large companies

that use printed circuit boards 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 industry.

The research involved four major tasks: the design of

software architecture for electronically sharing component

specifics; the development 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 standardsbased, data-sharing framework 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 manufacPREAMP CONSORTIUM 237
PROJECT HIGHLIGHTS

PROJECT:

To develop a standards-based data-sharing framework for automating the

design and manufacture of electronics components. The framework 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 tliousands):

ATP $5,166 37%

Consortium 8,625 63%

Total $13,791

ACCOIVIPLISHIVIENTS:

PreAmp successfully completed all technical goals, including development

of a knowledge-based software system that can extract process "rules" 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; I researchers presented several papers at

professional conferences, including the

• Design and Automation Conference,

• National Electronics Packaging Conference, and

• Reliability in Agile Manufacturing Symposium;

H PreAmp hosted a "Vendor Opportunity Forum" to give software vendors

opportunities to commercialize the technology developed by the project.

COIVIIVIERCIALIZATION STATUS:

A modest amount of commercialization is under way via the product intro- duced 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 continues 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.

Composite Performance Score:

COIVIPANIES:

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.

turing 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 consor- tium has been adapted and incorporated into software tools

by STEP Tools, Inc., an informal participant in the ATP

project. STEP Tools developed a prototype STEP 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-DeveloperTM,

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 ATP-project subcontractor in developing soft- ware 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

238 PREAMP CONSORTIUM
does, the creation of commercial products will be much

more likely.

Three members (Boeing, Hughes, and Rockwell)

have arranged with SCRA for it to serve as the PreAmp

agent with vendors interested in creating commercial soft- ware 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.

Studies cited by tlie consortium suggest

ttie new technology can reduce time-tomari<et by 50 percent or more, double component quality levels, and reduce development costs by 30 percent to 70 percent.

Reorganization and company upheavals among consor- tium 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.

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.
ii((II
MANUFACTURING

SAGE AND 3M CORPORATION

Smart-Window Technology

E.wch day millions of Americans spend the day inside buildings with windows as their only connection to

the outside world. Windows allow the sun 's warmth and light to permeate our living space and offer views of the

outside. Unfortunately this luxury brings with it the high costs of heating, cooling, and shading. Windows, which

have largely escaped technological advances, are now being taken into

the high-tech arena.

A Strong Potential Seen for Thin-Film

Electrochromics

For years, thin-film electrochromics has been seen as a

possible way to make "smart windows'^—windows with an

electrochromic (EC) coating that can electronically control

the flow of solar light and heat in response to changing

outdoor conditions. On hot, sunny days the tint in the windows would darken to reduce glare and block out heat.

On cold, cloudy days the windows would clear to allow

sunlight and heat to fill the office or home. In addition

to reducing energy requirements, the electric shading of

smart windows may eliminate or reduce the need for

expensive blinds or curtains.

On hot, sunny days the tint in the

windows would darken to reduce glare

and block out heat. On cold, cloudy days

the windows would clear to allow sunlight

and heat to fill the office or home.

The race for a profitable and reliable electrochromic

production process has been pursued aggressively for more

than 15 years. Electrochromic technology is appealing as a potentially broad-based area that promises to be useful not

only in windows in buildings, but also for adhesive tape

films for automotive windows, electrically adjustable eyewear, advanced flat batteries, and other applications. The

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * * *

The top photo shows two

electrochromic smart windows in the clear state

allowing in more daylight

and minimizing the need

for interior lighting. In

the lower photo, a window

darl<ens to eliminate glare

and improve comfort

and energy management

while maintaining vision

through the glass.

potential for multiple applications and broad benefits of

thin film electrochromics has made it one of the most

intensely researched areas of material science around

the world.

U.S. Partnership Develops to Pursue the Technology

Against this backdrop of worldwide competition, enters

John Van Dine, who in 1990 founded a small company

SAGE AND 3M CORPORATION 241
PROJECT HIGHLIGHTS

PROJECT:

To develop advanced electrochromic materials and production processes

leading to devices suitable for electronically controlled smart windows and

other applications.

Duration: 6/07/93- 12/31/96 ATP Number: 92-01-0123

FUNDING (in thousands):

ATP $3,472 48%

Company 3.821 52%

Total $7,293

ACCOMPLISHMENTS:

This project led to major advances in electrochromic materials and

processes and opened up potential applications in a variety of useful

products. The project: B developed new understanding of large-area electronic devices; M produced several working prototypes of smart windows for competitive

performance testing at the National Renewable Energy Laboratory

(NREL) that were rated best overall; M produced prototypes that tests show are capable of tens of thousands

of tint changes (cycling), equivalent to more than 15 years of use,

without degrading performance;

B produced prototypes that are estimated to reduce the transmittance of

light and heat, depending on the setting, by 30-96 percent, and to yield up to a 50 percent reduction in energy costs for commercial buildings,

as demonstrated by Berkley National Laboratory and ASHRAE tests; B produced two patents for technologies developed in the project:

"Counterelectrode Layer" (No. 5,919,571: filed 7/14/1997,

granted 7/6/1999);

"Sputtering of Lithium" (No. 6,039,850: filed 5/29/1997,

granted 3/21/2000).

COMMERCIALIZATION STATUS:

Sage announced on June 17, 1998, that it had reached an agreement with Apogee Enterprises, Inc., to develop, produce, and market smart windows.

This commercialization venture is a direct result of the encouraging test results

for the prototype windows developed in the project. A leading fabricator,

distributor, and installer of value-added glass products. Apogee, and its

subsidiary Viracon, will target the high performance architectural glass market.

In addition, SAGE has recently received a DOE-NETL grant that will help

it to focus further on issues affecting efficiency of fabrication.

Sage has successfully set up pilot line operations, including an industrial

scale coater and fabrication systems, leading to the production of full size

switchable windows measuring up to five square feet in area.

In addition. Sage has entered into a number of industry alliances to develop and commercialize smart window products. In February 2001, Sage and

Honeywell, the global home and building controls leader, announced an

alliance whereby Honeywell will develop and manufacture the systems for

Sage's smart windows, enabling user control of EC glazings to transform win- dows into comfort-enhancing and energy-saving appliances. Sage and Velux,

a leading global producer of skylights and roof windows, have partnered to

test market Sage skylight products. Sage also has joint projects with other

original equipment manufacturers — i.e., Pella and Four Seasons Solar

Products Corporation — for product development, joint testing, and market

introduction. Sage expects to move into volume manufacturing by the end

of 2002, when it will significantly increase its staffing level

OUTLOOK:

Industry experts have predicted that electrochromic windows are three-tofive years from wide-scale commercial use. New manufacturing techniques must be developed that will eliminate even the smallest defects in the electrochromic layers. These defects are the major barrier to producing economical, large-size architectural windows. Other potential applications of electrochromic technologies include next-generation flat, compact batteries; new

and retrofitted automobile windows; and adjustable eyewear. The outlook

appears excellent for this technology.

Composite Performance Score: * * *

COMPANY:

SAGE Electrochromics, Inc.

2150 Airport Drive

Faribault, Minnesota 55021

Contact: Neil Sbar Phone: (507) 333-0078 Number of employees: 5 at project start; 10 at project end

in Piscataway, New Jersey, called Sun Active Glass

Electrochromics, Inc. (SAGE), to develop glass coatings.

Following an unsuccessful ATP proposal in 1991, he was

encouraged to strengthen his plan by finding a technology

partner. To that end, in 1992, SAGE formed a joint

research and development partnership with the 3M

Corporation, and the two companies brought in scientists

from Rutgers University's Center for Ceramic Research

as additional collaborators. The joint venture submitted

a proposal in ATP's 1992 General Competition and was

successful.

The ATP provided $3,472 million, matched by $3,821

million from the 3M Corporation and SAGE, for a project

to develop advanced electrochromic materials and production processes. The project was designed to build upon

the EC synthesis and processing experience of tiny SAGE,

while also drawing upon the module technology and manufacturing and commercialization skills of the Fortune 500

...the two companies brought in scientists

from Rutgers University's Center for Ceramic

Research as additional collaborators.

242 SAGE AND 3M CORPORATION
company, 3M. SAGE was to focus on the technical

requirements relating to EC glass, and 3M on the technical requirements relating to tape.

What Makes Smart windows Smart?

The electrochromic (EC) window consists of a series of

thin conducting layers that change optical properties when

an electrical voltage is applied. Each layer is thinner than

a sheet of paper, and together the layers support the transport of electrons and ions. One layer of the film—colorless

lithium metal-oxide—acts as the positive electrode, another layer—tungsten oxide—acts as the negative electrode.

When voltage is applied, lithium ions begin to traverse

from the positive electrode to the negative electrode, a

process that turns the tungsten oxide to lithium tungstate

(a light absorbing, blue-gray substance), formed by the

chemical addition of ions. The longer the voltage is

applied, the more ions are transferred, and the darker

the window becomes.

During the production process, ceramic thin-film

layers containing the electrodes are deposited with great

precision onto a transparent substrate primarily by a vacu- um coating technique. The multilayered electrochromic

device is then mounted inside a conventional glass frame.

The conducting layers are connected to a power supply,

controlled by a switch. The switch allows the number of

ions, and thus the amount of light transmitted in the electrochromic film, to be varied incrementally to satisfy user

preferences for heat and sunlight. The opacity of the

glass can be controlled by a simple on-off switch, a useradjustable rheostat to meet individual user preferences

of heat and sunlight, or an automatic system driven by

sensors or timing devices.

Unequal Company Progress

Previous to the ATP-funded research, the state-of-the-art

capability in producing electrochromic materials for windows resulted in a laboratory curiosity, a piece of glass

measuring less than two square inches. Furthermore, the

EC properties of the tiny piece of glass were not well

understood.

During the project, SAGE moved forward successfully

with its materials and process research on EC glass, and

met with great success. 3M, on the other hand, encountered obstacles in managing the heat level in the production of its tapes. A method of controlling the heat level was needed to avoid melting the tapes. This serious obstacle that the company was not able to solve caused it to reduce its role to a supporting one for SAGE.

SAGE Prototype Smart Windows Best Rivals

in Critical Performance Tests

By the end of the project, SAGE was able to produce

prototype smart windows approximately one square foot

in size that incorporated the new technology and demonstrated the performance characteristics and decade-long

durability of EC glass required by the architectural glass

industry. This new capability represented a major step

forward, both technically and in terms of demonstrating

commercial potential for the technology.

The functional EC window prototypes produced in

the ATP research project were subjected to independent

performance tests in an outdoor desert environment and

at the National Renewable Energy Laboratory (NREL).

NREL, the world's leading certification laboratory for

energy saving technology, used a solar simulator with

xenon lamps to test alternative smart window designs

for environmental longevity. Competing technological

approaches from other companies each had their relative

strengths, but the SAGE smart windows displayed the

best overall performance.

The rigorous tests demonstrated that the new SAGE

windows are capable of tens of thousands of tint changes

(cycling) without degrading. This translates into more than

15 simulated years of harsh sun while maintaining adequate

performance.' Architectural consumers currently expect

warrantees of at least 15 years and useful lives of at least

20 to 25 years. These tests show that electrochromic windows, especially SAGE's design, hold great promise in

meeting the longevity required for commercial building use. At the end of the project, the company was ready to

take the next step: scaling up to full size electrochromic

windows for architectural applications on residential and

commercial buildings. SAGE moved toward this goal,

keeping in mind for commercialization purposes that it was critical the EC windows could be manufactured in

volume at reduced cost.

SAGE announced an agreement with

Apogee Enterprises, Inc., to develop,

produce, and market smart windows.

' SRI Report, Smart Glass: Seek'uiga Clear View ofthe Future, 1998, p. 15.

SAGE AND 3M CORPORATION 243
Commercialization Agreement witli Largest

Specialty Glassmaker in North America

SAGE announced on June 17, 1998 — about a year and a

half after the project completed — that it had reached an agreement with Apogee Enterprises, Inc., to develop, produce, and market smart windows.' The company promptly

relocated from New Jersey into a corner of Apogee's

Viratec manufacturing plant in Minnesota. This commerciaHzation venture is a direct result of the encouraging test

results for the prototype windows. Apogee, a large fabricator, distributor, and installer of high-end, specialty glass

products in North America, and its subsidiary Viracon, will

commercialize the licensed smart windows for mass distri- bution in the high performance architectural glass market.

Viracon has extensive experience in producing glass

products with high performance coatings, and supplies a

large global window market. These two strengths will

help the new SAGE-Viracon team take the electrochromic

technology more quickly to full-scale production. There is, however, a difficulty that will have to be addressed before

cost-competitive architectural windows can be produced:

the control of defects in large size films. Since current prototypes had not been produced in a size greater than one

square foot, it was critical that Viracon be able to develop

a manufacturing capability for producing larger EC windows. SAGE has received a Department of Energy/

National Energy Technology Lab grant from the

Department of Energy to improve the manufacture

of smart windows on a large scale.

ATP Brings Together Complementary Companies

The ATP project manager. Dr. Gerald Ceasar, with his

extensive industry experience with electrochromics and

photovoltaics technology, saw potential commonality of

interests of Solarex, a photovoltaic company, and SAGE.

He made the introductions and this technology brokering

soon yielded the integration of photovoltaics into the new

smart window design. The inclusion of photovoltaics (in

the form of built-in sensors) will allow engineers to set the

windows to adjust automatically to changing sunlight conditions. Photovoltaics (in the form of energy producing

solar collectors) can also provide all of the energy needed

to power the window, thus eliminating the need for external wiring.

In the future, integrated photovoltaics may even be

able to produce excess electricity that could power all or

part of the entire building and pay for the new windows

many times over. Ultimately, this may reduce the lifecycle costs of purchasing, installing and operating windowed buildings. Technology integration, encouraged by

ATP managers, means connecting emerging technologies

from different companies and industry sectors together in

mutually beneficial ways.

SAGE Moves Ahead of International

Rivals in Smart Window Technology

Although SAGE had been awarded a total of 7 patents

for its electrochromic technology before the ATP project,

approximately 1,800 patents had been issued worldwide

for electrochromic technology. Of those patents, Japanese

interests hold 1,500.' The Japanese, Europeans, and

Australians have all mounted major efforts to develop

EC technology.^ In Australia, for example, researchers at Monash University are developing an energy-efficient

smart window, an effort that has been underway for

the past five years as part of a $3 million project. The

The Japanese, Europeans, and

Australians have all mounted major

efforts to develop EC technology.

...technology brokering soon yielded

the integration of photovoltaics into

the new smart window design.

Australian Science and Technology Administration targeted

the new windows to be ready for large-scale commercial

production around the turn of the century.'

The competition for leadership in EC windows

around the world is intense. As a result of the ATP award,

- PRN Newswire, June 16, 1998 Press Release.

' Jeffery Kahn, "Researchers Seek Patents on Electrochromic Smart Windows," February 14, 1992, Berkeley Lab Science Articles Archive.

^ Michael Rubin, Lawrence Berkeley National Laboratory, personal interview, August 5, 1998.

' Monash Publications, University Marketing & Development, Monash University, Australia; <www.monash.edu.au/pubs/eureka/Eureka_95/window.html > web page accessed July 8, 1998.

244 SAGE AND 3M CORPORATION
SAGE was able to speed the research in collaboration with

3M, and get an advanced prototype to product test more

quickly than overseas competitors. According to SAGE

project manager Neil S. Sbar,

Early support from ATP was critical in enabling SAGE

to develop the electrochromic (EC) materials systems

and device structure for scaling the technology from a

laboratory curiosity to switchable prototype windows

nearly one square foot in size. Without ATP, our

progress would have been delayed by more than two

years. Also, the prestige and credibility derived from

the relationship greatly facilitated subsequent industry

and government partnerships leading to full size EC

window fabrication.*^

And, according to SAGE president John Van Dine,

[ATP] enabled us to accelerate and expand our technology development and put our company into a better

internationally competitive position.'

Smart Windows Beat Traditional Glazed

Windows for Energy Efficiency

The price-sensitive architectural market will require significant cost savings over the life of the window to justify

a major market shift away from single-glazed and multiglazed windows. Based on test results, full-size replacement smart windows can reduce peak loads for lighting,

heating, and cooling up to 60 percent when compared to high-end glazed windows. And they can reduce peak loads

up to 85 percent compared to single-glazed clear glass,**

which blocks only 21 percent of solar heat gain into the

room.'' To accomplish these results, electrochromic smart

windows reduce the transmittance of light and heat,

depending on the setting, by 30 to 96 percent.

Even at this early stage of electrochromic window

development, savings of $0.21 per square foot in areas of the country that have cooling-intensive building loads

have been calculated, based on $0.08/kWh electricity

costs. Thus, a medium-sized office building (100,000

square feet), with windows covering 60 percent of the

outside surface, could see operating savings on the order

of $21,000 per year if smart windows are used.'" Over a 25-year life, these savings would have a present value

of $365,000 (based on a 3 percent real [net of inflation]

discount rate, and assuming stable energy costs [also net

of inflation]"). Cost analysis that includes direct energy

costs, initial chiller investments, utility demand-side

management rebates, and lighting savings indicate that

smart windows (at an added first cost of $161/m2) could

pay for themselves in as little as four years.

A recent American Society of Heating, Refrigeration,

...Smart windows could pay for

themselves in as little as four years.

and Air-conditioning Engineers (ASHRAE) study showed

that EC windows could provide energy efficiency perform- ance comparable to a well-insulated wall. For a building

located in a cooling-dominated environment (e.g..

Phoenix, Miami, Los Angeles), the study estimates that

smart windows will significantly lower heat gain and the

energy demands of cooling. The ASHRAE work also

found that lighting expenditures could be significantly

reduced because smart windows, when bleached, allow

more light to enter the room than standard windows. In

heating-dominated areas (e.g., Chicago, or Greenbay),

smart windows can increase the solar heat gain compared

to standard windows, reducing heating costs in winter and

cooling costs in summer. The study found that the cooling

savings of windows with reflective glazing are comparable

to those with electrochromics. The total energy savings,

including that from reduced lighting demands, however,

favor smart windows technology, in spite of its higher

initial costs." Twenty billion dollars is the estimated value of the

energy lost through the windows of buildings in the

United States each year. This represents more than five

Telephone interview and personal correspondence with Dr. Neil S. Sbar, December 2000.

' NIST website: <www.atp.nist.gov/atp/success/sage.htm>.

^ Facilities Design and Management, April 1996, p. 15.

' SRI Report, Smart Glass: Seeking a Clear View of the Future, 1 998, p. 12.

Rubin, Selkowitz, Sullivan, Ai'^/M£ Transactions, June 1997, pp.149-153.

" U.S. Dept. of Energy, Annual Energy Outlook 1998, Energy Information Administration, 1998, p. 80.

Lee, Rubin, Selkowitz, Sullivan, Review of Electrochromic Window Performance Factors, Lawrence Berkeley Laboratory Report # 35486, p. 14, 1994.

" Rubin, Selkowitz, Sullivan, ASHRAE Transactions, June 1997, pp.149-153.

SAGE AND 3M CORPORATION 245
percent of total U.S. annual energy use." Globally, a phased-in total transition to smart window systems in

office iouildings could translate into energy savings on

the order of $11.5 billion to $22.5 billion per year."

Although this full potential is unlikely to be realized any

time soon, smart windows promise eventually to have a

significant impact on world window and energy markets

as they enter commercial production and are adopted by

architects, builders, and building owners as a means of

achieving dynamic control of heat and light gain into

a building.

An architectural advantage of electrochromic windows

is that they eliminate glare and the need for other shading

devices. Automated or manual blinds, curtains, and shutters can be expensive to install, maintain, and clean.

Reducing costs in this area will enhance the commercial

viability of smart windows. Light has also been shown to be an important factor for the work environment. Studies

demonstrate that allowing sunlight to fill offices (otherwise

shaded by permanent glazes) can increase productivity,

lead to fewer days of absenteeism, and fewer errors on

the job."

Smart Window Technology Is Potentially Far Reaching

Enabling advances in electrochromic technology resulting from this ATP funded project have encouraged the

application of large-area electronics to other commercial

products, beyond the scope of window applications.

Researchers are currently working to apply the ion shuffling capabilities of electrochromics to thin film flat batteries for use in consumer electronics, such as cellular phones

and laptop computers, which may then be able to operate

significantly longer and with much lower weight. Automobile windows and adjustable eyewear are examples of

where the advances of electrochromics may have future

market potential. The future is bright for the broad use

of large-area electronics, and the foundations are being

laid today.

SRI Report, Smart Glass: Seeking a Clear View of the Future, 1998, p. 2.

" Ibid.

LaSourd, Selkowitz, Lawrence Berkley Laboratory, June 1994, p. 111.

246 SAGE AND 3M CORPORATION
SAGINAW MACHINE SYSTEMS, INC

Better Precision for Machine

Tools Through Thermal-Error Correction

Khine 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 interface area to take away enough heat to allow

the job to be performed.

COMPOSITE PERFORMANCE SCORE

(Based on a four star rating.) * *

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

Customers manufacturing highprecision parts realize productivity

improvements of 10 percent

to 30 percent . . .

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 heat-related changes in the

machine tool as the part is being worked. When the new

A new high-precision

vertical lathe which

incorporates the new

thermal-error compensation technology,

first delivered to

customers in 1998.

technology is incorporated into machine tools, the result

is higher-quality parts.

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

SAGINAW MACHINE SYSTEMS, INC. 247
PROJECT HIGHLIGHTS

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 84%

Company JOO 16%

Total $640

ACCOIVIPLISHIVIENTS:

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: B developed several prototype tools incorporating the new technology;

H 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.

COIMIViERCIAUZATION 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.

Composite Performance Score: if

COIVIPANY:

Saginaw Machine Systems, Inc.

301 Park St.

Troy, MI 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

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.

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 independent

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 AccuSystem was the most accurate. All in all, 30 characteristics

of machine performance 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

248 SAGINAW MACHINE SYSTEMS, INC.

two-thirds reduction in drift compared with the next

best machine.

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.

. . . most machine tools that make

high-precision parts are lil<ely to be '

improved in the long run.

'

I

Productivity Improvements i Users of the technology are able to take advantage, at rea- sonable cost, of a substantial increase in the accuracy of

their machine tools, improving the precision of the work- '

pieces 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 j the Saginaw equipment is now in use, other manufacturers

^

I
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.

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.



Development of New Knowledge and

Early Commercial Products and Processes

Advanced Materials and Chemicals I Biotechnology I Electronics/Computer Hardware/Communications I

Information Technology I Manufacturing

Table Al. Advanced Materials and Chemicals (Chapter 2)

Awardee Name

(A)

Technology Developed

(B)

Product or Process Commercialized

^

AlliedSignal, 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 likely.

BioTraces, Inc. Multiphoton detection (MPD) 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.

Geltech Inc. Room temperature net-shape gelcasting

method—demonstrated in the production of

high-quality, 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 inex- pensive optoelectronic switches for computers

and communications systems.

Commercialization not likely.

IBM Corporation Low-polymer foams—demonstrated as

potentially feasible for microelectronics

insulators.

Commercialization not likely until

follow-on research takes it further.

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 plastic

panels made compatible, made by

Eagle Plastics Systems of Florida in collaboration with University of Florida

researchers.

APPENDIX A 253
Awarde-e f-lame

(A)

Technology Developed

(B)

Product or Process Commercialized

(C)

Vv'estinghouse and SGS Tools Higher power hot cathode plasma torch

technology and integrated gas recycling

process technology

Commercialization likely by a newly formed

company.

Table A2. Biotechnology (Chapter 3)

Awardee Name

(A)

Technology Developed

(B)

Product or Process Commercialized

(C)

Aastrom Biosciences, Inc. Bioreactor 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 likely.

Amersham Pharmacia Biotech Reengineering of thermophilic enzymes and

methods for isolation and genomic characterization of hyperthermophiles from deep-sea

vents.

ThermoSequenase, DNA polymerase

for DNA sequencing.

Anhlnc: nnrnnration Viral dpartivation nrnrprliirp^^ h?^<^pd on rritiral

fluid technology—demonstrated in cleaning

contaminated blood supplies.

Cnmmprriali7?5tinn nn<^«^ihlp

Integra LifeSciences A scaleable process for manufacturing

A new bioabsorbable polymer.

Tyrosorb Synthetic Polymers, a new

material for making implantation devices

for musculoskeletal surgical applications

in clinical trials.

Molecular 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 largex moiecuies ror urugs ana oiner

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 likely.

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 prostheses.

Commercialization likely.

254 APPENDIX A
Table A3. Electronics/Computer Hardware/Communications (Chapter 4)

Awardee Name

(A)

Technology Developed

(B)

Product or Process Commercialized

(C)

Accuwave Corporation A process for producing pliotorefractive

materials based on lioiographic technology

demonstrated in fiber Optics telecommunications applications.

Wavelength division multiplexing

components; wavelength controllers,

wavelength lockers and fiber-optic

collimators.

American Display Consortium

AstroPower, Inc.

Calimetrics, Inc.

Cree Research, Inc.

Cynosure, Inc.,

Tape Automated Bonding (TAB) process

for mounting ICs on a display surface

Improved liquid-phase epitaxial growth

methods and a high-throughput manufacturing

technology—demonstrated in the fabrication of

high-performance optoelectronic devices such

as ultra-bright light-emitting diodes (LEDs).

TAB process used in production

New epitaxy technology incorporated

in all company production processes,

including the Silicon-FilmTM solar cell.

Pit Depth Modulation and Multilevel Technology Licensed for commercialization

Methods for increasing the quality and size

(to two inches or more) of silicon carbide single

crystals—demonstrated in the fabrication of

LEDs and other electronic and optoelectronic

devices.

A fault-tolerant optical system—demonstrated

for a diode-laser array in a laser surgical

application.

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.

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 impianter,

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.

ETOM Technologies, Inc. Techniques for writing and reading more than one bit of information at the same spot of an

optoelectronic disk, and new optoelectronic

disk materials.

Commercialization not likely.

FSI International, Inc.

Hampshire Instruments, Inc.

(Joint Venture)

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.

Techniques for laser pumping of high-power laser

systems—demonstrated using a laser-diode array

to pump a neodymium-doped gadolinium gallium

garnet laser for producing low-cost x-rays.

Commercialization possible.

Commercialization not likely.

APPENDIX A 255
Avtf'ardee Name

(A)

Technology Developed

(B) (C)

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 investi- gation of weather conditions in the upper

atmosphere (70 miles above earth).

Lucent Technologies, Inc. Fabrication, testing, and alignment techniques

for extremely precise aspherical, multilayercoated mirrors—essential for extreme

ultraviolet (EUV) technology, a contender for

future lithography systems.

Subcontractor Tinsley Laboratories:

application of improved fabrication methods

learned in the project to all its aspherical

mirror production.

Subcontractor Trope!: a specialized interfer- ometer it now uses in other contract work.

Commercialization possible for lithography

systems.

IViulti-Film Venture (Joint Venture)

NCMS (Joint Venture)

Procedures for interconnecting thin-film integrated circuits—targeted at complex,

multi-film 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.

Advanced processes for making printed

wiring boards.

Commercialization possible.

Single-ply fiberglass boards; thin copper

plating; test procedures; plasmas monitoring

device; imidazole treatment.

NetOptix Corp (formerly Galileo) New processes for fabricating micro-channel

plates (MCPs) using photon detectors and other

types of electron multipliers—demonstrated

in night vision applications.

Commercialization possible.

Nonvolatile Electronics, Inc.

Spire Corporation

New procedures that enhance the

producibility, circuit density, and signal strength

of giant magneto-resistance (GMR) materials

demonstrated in random access memory (RAM)

and highly sensitive sensor applications.

Feedback-controlled, chemical vapor deposition

processes—demonstrated in a reactor in a highthroughput mode for fabricating low-cost,

high-quality metallo-organic laser diode arrays and other optoelectronic devices.

Highly sensitive sensors based on giant

magneto-resistance materials that could be

used in brakes, pacemakers, and many

other applications.

A prototype reactor being used for

limited production 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 fluores- cent lamps placed with more than a dozen

companies for further evaluation and field

testing of the new technology in cockpit

and other applications.

Vitesse Semiconductor GaAs design innovations. H-GaAs IV-based transceivers and ATE.

256 APPENDIX A
Table A4. Information Technology (Chapter 5)

Awardee Name

(A)

Communication intelligence

Corporation #1

Technology Developed

(B)

New data-entry software technology that

recognizes each user's natural handwriting

without "training" the computer of the userintended to allow a pen and tablet to be used

instead of a keyboard.

Product or Process Commercialized

(C)

Enhanced Handwriter(r)MXTM—a stylus-

-and-pad system that recognizes

hand-printed text.

Communication Intelligence

Corporation #2

Engineering Animation, Inc.

A recognition system for hand-written

Chinese —Intended to replace a cumbersome

data-entry system that uses a keyboard.

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.

Commercialization likely.

Three CD-ROMS (The Dissectible HumanTM,

The Dynamic HumanTM, and CardioViewer

3DTM), plus two medical textbooks that are used to train medical personnel.

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 post-production movie processing

at a number of facilities in the

entertainment industry.

Torrent Systems, Inc.

Union Switch and Signal, Inc.

Component-based software and user interface

for building parallel processor applications

a tool for the professional programmer.

Distributed Multi-agent-based optimization

technology.

OrchestrateTM - an innovative component

software prototype system that enables

a variety of hardware systems to handle

massive amounts of data and increase

processing efficiency.

"Real-time Control Traffic Controller"

and "Offline Railroad Operations Planner" in testing for possible commercialization.

Table A5. Manufacturing (Chapter 6)

Awardee Name

(A)

American Superconductor

Corporation

Technology Developed

(B)

Wire fabrication and winding techniques for high-temperature superconducting materials,

with primary applications in the development

of extremely efficient large motors.

Product or Process Commercialized

(C)

CryoSaverTM—electrical wires that carry

current into and out of cryogenically cooled

devices, which reduces electrical resistance

and helps users achieve better operating

efficiencies.

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 through licensing.

APPENDIX A 257
Awardee Name

(A)

Auto Body Consortium

(Joint Venture)

Technology Developed

(B)

IVleasurement and process control teclinology —dennonstrated in reduction of dimensional

variation in auto body assembly to two

millimeters or less.

Product or Process Commercialized

(C)

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.

E.I. Dupont de Nemours

& Company

Thin-film fabrication processes for hightemperature superconducting materials —^targeted toward low-cost electronics

components.

New thin-film components, incorporated

into magnetic resonance imaging

equipment for use in hospitals

and clinics.

ncipiVldLfc; rvOIJOLlOb, IliL. Qr^or'isal i7oH liHar /lidkit t~\'ife^f^^ir\n ^anH rar\ci^\ opcL/ldllZcU llUdl ^HgliL UlfcCUOIJ dflU rdligcj scanner and related locating technologies

demonstrated in the development of an

intelligent autonomous mobile robot capable

of maneuvering around on a factory or

hospital floor.

ncipiVtdLc rvOUOLo in Uoc do UcMVcry

devices in about 100 hospitals in the

United States and Canada.

Illinois Superconductor Corp. Fabrication process for thick-film, hightemperature superconducting materials

demonstrated in the production of

radio-frequency components for wireless

applications.

Two products—SpectrumMaster® and

RangeMaster®—installed in 22 cell phone

base stations in 12 cities.

Microelectronics Center

of North Carolina

Integrated Force Array technology, based on

electrostatically driven membranes.

Commercialization possible but

not imminent.

Perceptron, Inc. Image processing techniques and algorithms

for developing specialized vision software.

Commercially demonstrated in lumber

mill and steel mill.

PreAmp Consortium

(Joint Venture)

A knowledge-based software system that 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. Future commercialization possible for the

complete system.

SAGE Electronchromics, Inc. Electrochromic technology for producing large- area electronic devices.Commercialization of electrochromic

windows underway.

Saginaw Machine Systems, Inc. Intelligent thermal-error correction technology,

based on a generic mathematical model of

thermal errors—demonstrated in high

precision machine tool applications.

Accu-System—a new intelligent

process controller for increasing the

accuracy of machine tools.

258 APPENDIX A
APPENDIX B

Terminated Projects

-Z

4M^tthe end of an ATP competition, projects are selected for award and the winners are announced. Most of

ttiese projects proceed tiirougti tfieir multiyear researcti programs to completion. A few of the projects that are

announced, however, never actually start. A few others start, but are not carried through to completion. Rather,

they are halted for a variety of reasons. The projects that are announced but do not start, and those that start

but are stopped prior to completion, are collectively called by the ATP "terminated projects.

During the time that the 50 projects covered in the body

of this report completed their research agendas, 16 of the

522 projects announced by the ATP through 2000 were

terminated short of completion. This appendix examines

the reasons for their termination, and the funding spent on

the projects.

In addition, one of the terminated projects is reviewed

in detail. The purpose is to provide insight about what can go wrong during the complex, challenging period of

research, and also to illustrate that much can be learned

despite project derailment.

Reasons for Termination

Thus far, projects have terminated short of completion for

the following six principal reasons:

Reason 1: A company leading a project, or one or more companies in

a joint venture, may request their project be stopped due

to unexpected, adverse changes. Shifts in company strategic goals; major reorganizations, mergers, and changing

leadership; changes in market demand and the competitive situation are among the events that may affect the

internal and external business climate in which companies

operate and plan. Any of these developments may disrupt

project plans.

Reason 2: Financial distress may cause one or more companies providing matching funds to become unable to meet the

resource commitment that is a necessary condition for

ATP funding. Cash-flow difficulties may force a small

company to drop its research activities and pursue shortterm survival goals, or it may go bankrupt. Financial backers may pull back or fail to materialize as expected, or they

may delay. Corporate internal sources of funds may not be

provided as expected.

Reason 3: Organizations proposing as a joint venture may find last- minute obstacles to signing their agreement and decide to disband their planned partnership.

Reason 4: Lack of technical progress can result when bottlenecks

arise or technical problems prove intractable. Technical

challenges may be even more difficult than expected.

Personnel or management deficiencies, or unavailability of

prerequisite materials, components, or equipment may

also end a project prematurely.

Reason 5: Early success can obviate the need for a project to continue.

That is, unexpected events in research can have positive

as well as negative effects.

Reason 6: Downstream changes may move a project out of compli- ance with ATP's selection criteria, and cause ATP to stop

the project. For example, a project may attempt to shift

away from challenging, enabling research toward business

as usual approaches; or the loss of key members of a team

(without a plan for overcoming the deficiency in a timely

way) may threaten the ability of a project to meet its goals.

APPENDIX B 259
Stxteen Terminated Projects

Figure B-1 shows the distribution of 16 projects terminated during the time the 50 featured in the body of the

report were completed. To date, terminations are running

from five to six percent of total projects selected and

announced.'

Figure B-1. Distribution of Terminated

Projects by Reason for Termination

Reason 5

0%

1 = Company or JV member(s) requested project be stopped due to change in strategic goals, structure, markets, or other factors

2 = Financial distress B 3 = JV members could not reach agreement

4 = Lack of technical progress

5 = Early success

6 = ATP stopped project due to changes in scope, membership,

performance, or other factors causing the project no longer to meet ATP criteria

Of the 16 terminated projects, 5 were stopped before

they got started. The remaining 1 1 went varying distances

in their research agenda before they were stopped. Thirty- one percent of the projects were joint ventures whose

members could not reach final agreement among themselves, and, therefore, never progressed further. An equal

percentage got started, but closed down because the project leader or joint-venture members wanted the project

stopped due to change in strategic goals, structure, markets, or other factors. Financial distress caused 19 percent

of the projects to end prematurely. These were primarily

small companies that encountered cash-flow difficulties.

Terminated Does Not Equal Total Failure

It is an oversimplification to think of the terminated group

simply as project failures—although they clearly did not

live up to expectations. Terminated projects can produce

important knowledge gains even when ultimate goals are not reached. As the following example demonstrates, ter- minated projects may yield patents, papers, collaborative

relationships, and products.

Even projects that stop without ever getting off the

ground entail a great deal of integrated planning for

research, development, and business activities. They typically entail substantive cross-disciplinary contact among

scientists and other researchers, cross talk among technical

and business staff, and high-level negotiations among

business executives at different companies. Often the

planning period brings together business staff with university researchers, federal laboratory specialists, and other

nonprofit facilities. The ATP process has been said by

many to stretch the thinking and horizons of participants

in the process. There are likely to be extended effects of

this process that may bear fruit in future diverse and difficult-to-capture ways.

Would-be joint-venture partners may regroup to reapply to ATP, or find other ways to cooperate. Companies

may learn about new opportunities. They may apply the

integrated planning techniques to other projects. The

companies involved, as well as others, may learn from the

terminated projects, approaches to avoid or to pursue. In

short, terminated projects as a group may yield some positive effects even as they incur costs. The mini-case treatment of a terminated project that

follows illustrates the achievements and failures of a project that went part of the way: the project aimed to develop

composite flywheels for electric vehicles. It lasted nine

months of an anticipated three-year period, and was terminated when the company requested that it be stopped due

to an unanticipated change—in this case, a change in cost

targets set by automakers.

' The analysis identifies the distribution of terminated project by reason for termination, while providing anonymity to the companies in order to preserve their rights regarding proprietary information.

260 APPENDIX B
Dow UT COMPOSITE PRODUCTS, INC.

Composite Flywheels for Electric Vehicles:

A Terminated Project that Produced Partial Results

Hectric Vehicles (EVs) are no longer concept cars of the future. Today, they offer the promise of

reduced air pollution and less reliance on imported crude oil, but technical obstacles impede their widespread acceptance. They are powered by an energy storage device, from which energy is converted to

either alternating current (AC) or direct current (DC), to drive electric motors that propel the vehicle.

Performance demands of the vehicle determine the key performance requirements of the energy storage

device: range dictates a minimum energy storage capacity; acceleration rate is tied to the maximum energy dissipation rate (surge or peak power) of the storage device. A power source that is both efficient and

light is key to successful commercialization, but thus far available sources have proven inadequate.

Battery Alternatives

Traditional lead-acid batteries currently used in EVs

cannot meet the performance requirements of the

automobile market. They have a number of drawbacks. Although they are capable of storing large

quantities of energy, they are inefficient at absorbing

high power levels (charging) and at dissipating the

high power levels needed for acceleration (surging).

Moreover, lead-acid batteries are very heavy. Even a

small EV such as a converted Geo Metro requires

nearly 700 pounds of lead-acid batteries, (at a cost of

some $1,600) for reasonable performance. This weight

requires additional energy and power to meet performance goals, and creates problems of crash safety

and vehicle handling. A number of alternative chemical battery technologies are under development, but none is yet recognized as a practical alternative.

Hybrid Electric Vehicles

Problems with conventional EVs have prompted work

on hybrid electrical vehicles. The hybrid EV uses two

energy sources: one for mass energy storage and the

second for power storage. A hybrid vehicle might, for

example, employ a lead-acid battery for energy storage

and another energy source to meet peak or surge

power needs. Flywheel systems are an important

contender for the latter application.

Flywheels

A flywheel is the mechanical equivalent of a rechargeable battery. It operates by storing kinetic energy in

the rotary motion of a ring or rotor spinning on an axis.

When coupled with an electric generator, its stored

kinetic energy can be rapidly converted to electrical

energy. Since this power conversion is a mechanical

process, energy transfer is direct, not limited by chemical reaction rates as in batteries. The rapid conversion

of kinetic energy to electrical energy makes flywheels

suitable for use as surge power devices for acceleration

of hybrid vehicles. They can be used to complement

the steady energy supply from a chemical battery or a heat engine (e.g., internal combustion engine).

In flywheel systems under consideration, a flywheel rotor is attached to a central shaft. To reduce

friction and increase speed, the shaft is mounted on

magnetic bearings and is contained within a vacuum

chamber. The central shaft is connected to an electric

generator that can absorb or discharge power as needed. The entire apparatus is inside a protective casing

to prevent damage to surrounding parts if the flywheel

becomes unstable or fails.

The Physics of Flywheels

The ability of a flywheel to store energy is dependent

on two characteristics: the weight of the rotor and its J

APPENDIX B 261
rotational speed. The heavier a flywheel's rotor or the

faster it spins, the greater the flywheel's energy storage capacity. However, storage capacity increases linearly with weight (in a ratio of one to one), while it is

the square of rotational speed. This concept favors

efforts to increase energy storage without increasing

weight (i.e., energy density). This goal, however, is constrained by limits in the strength of the rotor

itself. Increases in rotational speed generate increases

in centrifugal forces (the forces that push you to the

outside when you are spinning on a merry-go-round).

These forces place strain on the flywheel rotor. The

rotor must be able to withstand these forces without

breaking apart.

To reduce weight, composite materials have been

employed in the fabrication of rotors. Composite

rotors with the strength to endure the strain imposed

by high rotation speeds have had to be made with allgraphite fibers, which are too expensive for all but a few aerospace and defense applications. A promising

approach, therefore, was development of new methods for fabricating flywheel rotors with the requisite

strength that could use cheaper composite materials.

Dow-UT Pursuit of the Resin Transfer

Molding Process

In late 1989, Dow Chemical Company and United

Technologies Corporation (UT) formed a jointventure entity, called Dow-United Technologies

Composite Products, Inc., to exploit the commercial

potential of a new process, known as Resin Transfer

Molding (RTM), for fabricating composite parts. In

the subsequent five years, Dow-UT spent $40 million

to develop RTM into a commercially viable process.

It demonstrated the commercial viability of RTM for

high-performance aerospace and defense applications.

The focus was on using RTM in the production of

high-speed rotating parts, such as the fan spacers

used in the Pratt and Whitney 4084 commercial jet

engine. Dow-UT was also successful in developing

RTM for use in the production of high-volume,

lower-cost automotive applications. For example,

Chrysler used Dow-UT's RTM process for the

production of specialty automotive parts for the

Dodge Viper.

A Plan for Developing Strong, Lower

Cost Flywheels

In a 1994 focused program competition, ATP

announced the Dow-UT project as an award winner.

The planned ATP cost share was $519,000 over a three-year period. The goal of the project was to develop cost-effective production methods for strong,

lightweight composite flywheel rotors to be used in

hybrid electric vehicles.

For the ATP project, Dow-UT obtained the com- mitment of several other companies in subcontractor

roles and several other divisions of UT to contribute

essential skills and resources. Suppliers included

Fiberite Specialty Weaving Group, with experience in

a technique known as polar weaving.' Dow Chemical

worked on flow modeling and Test Devices engaged

in spin testing. One division of UT provided design

and test consulting, and another division was involved

in flywheel commercialization.

Dow-UT saw the technology as a multi-use technology with broad application through licensing in

the auto industry and beyond. Extensive licensing of

a technology tends to yield greater spillovers for the

economy.

An example of a potential application—if strong,

lightweight composite rotors could be developed—is

the use of flywheel systems by utilities in load-leveling devices (LL) and uninterrupted power supplies

(UPS). Load-leveling devices allow utilities to store power generated during times of low demand so that

it is available in times of high demand. This allows

utilities to meet growth in demand without building

expensive new plants. Uninterrupted power supply

devices are important to manufacturers, hospitals, and

others who need to guard against unexpected interruptions in power supply.

The centerpiece of the Dow-UT project was to combine the techniques of resin transfer molding

(RTM) and polar weaving in the construction of flywheel rotors. Polar weaving would be used to fabricate material with a continuous woven structure; the

RTM process would be used to create the finished

rotor from this material.

Composite flywheel rotors had previously been

fabricated using a process called filament winding:

^ After another company bought out Fiberite, Dow-UT undertook the development of the polar weaving technology in-house.

262 APPENDIX B
fibers were woven into flat sheets, treated with epoxy

resin, wrapped together, and compressed to create

forms. In contrast, polar weaving produces a continuous heHx of woven fibers, similar in form to a SlinkyTM

toy. This helical weave increases radial tensile

strength, that is, the capacity of the material to resist

centrifugal forces pulling it away from the center. Lack of radial tensile strength had previously constrained efforts to develop a composite flywheel capable of increased rotational speed.

Resin transfer molding (RTM) involves the use of

a vacuum mold into which resin is injected under

pressure. The resin permeates the woven structure,

which is at the same time shaped under pressure. The

resin gels and cures to create a solid piece. By achieving the shaping and curing function in the same step,

RTM reduced the cost of the fabrication process. In

addition, since RTM applies pressure through the

resin rather than through mechanical means, the piece

is shaped continuously, which eliminates the need for

expensive secondary machining. Production costs are thus considerably reduced.

Achievements

The combination of polar weave and RTM techniques

allowed Dow-UT to use cheaper materials to create

equally strong flywheel rotors. Dow-UT used fibers

made from glass mixed with graphite, at a cost of

about $1 per pound, a considerable cost reduction

from graphite fibers at $7 per pound.^ Although the

individual composite (glass and graphite) fibers are weaker than all-graphite fibers, polar weave and RTM

allow for the creation of rotors or other parts with the

requisite strength.

Dow-UT demonstrated flywheels in the ATP

project that were better in four ways. First, they could

spin faster. The new flywheels were tested at speeds

of up to 40,000 RPM, a 25 percent improvement over

older flywheel technology. Second, they had improved

lifetimes. Fatigue resistance was improved by a factor

of ten compared to older flywheel technology.^ Third,

production costs per pound were cut in half by the

new fabrication techniques, to less than $20. Fourth,

the improved flywheels were lighter. The reduced

weight and faster spinning speed increase the energy

density, that is, the amount of energy stored per unit

weight.

Another useful development from this project was

a software package that enabled better computer

design of the composite flywheel rotors. This software

allows engineers to model the performance of flywheel rotors fabricated with different types of fibers

and fiber architectures (the amount of fiber used in

hoop and radial directions). This tool should speed

future design and development work.

Project Stopped Early

After the project had been underway for less than a

year, the automakers revised their cost targets for EV

flywheel systems sharply downward. The revised

maximum cost required by the industry was below

$600 for a complete system, which included not only

the rotor, but also the motor/generator, magnetic bearings, vacuum system, housing, and additional elements. This figure was not much more than the actual

cost of the fiber for the rotor alone. The most

advanced system envisioned by the project would cost

more than $1,800. Dow-UT determined that these

new cost targets could not be met with existing technology, and discontinued its work on rotors for automotive flywheels. The ATP concurred, and by mutual

agreement, the project was stopped after nine months

and $99,035 in ATP outlays and $155,072 in company

costs.

Remaining Teclinical Obstacles to

the Commercialization of Automotive

Flywheel Systems

In addition to cost barriers, flywheels still face many

technical hurdles. There are the challenges of maintaining rotor integrity over longer lifetimes, containing

the flywheel in case of failure, and dissipating friction

in the bearings. Vacuum containment and magnetic

bearing advancements, which increase lifetimes and

reduce friction, will probably be required before flywheels come into widespread automotive use. The

safety question also hampers flywheel use. For example, the failure of a 1 kWh flywheel (the size required

' Hi^ Performance Composites, March/April 1996, p. 25; "Cheaper Composite Flywheels," Mechanical Engineering, June 1996

* Battery and EV Technology, June 1996, p. 25.

APPENDIX B 263
PROJECT HIGHLIGHTS

PROJECT:

To develop a cost-effective means of fabricating strong, lightweight flywheel

rotors from composite materials primarily for use in hybrid electric vehicles,

and also potentially for other applications. DURATION:

Planned: 8/15/95-8/15/98 Actual: 8/15/95-5/15/96 ATP Number: 94-02-0041

FUNDING (in thousands):

ATP 99 39%

Company 155 61%

Total 254

ACCOMPUSHIVIENTS:

Dow-UT met the originally targeted project goals for cost of production that

were based on estimates from the automakers. During the course of the project, the automakers revised their cost targets substantially downward. Based

on its progress to date, Dow-UT determined that the new auto industry cost

requirements could not be met and chose not to continue with the project.

Consequently, the project and ATP funding ended after only nine months. The project nevertheless made substantial accomplishments. A combination

of polar weaving and resin transfer molding (RTM) techniques in the construction of composite flywheel rotors allowed Dow-UT to use less expensive

materials than all-graphite models while maintaining structural integrity. The

successful development of this combined process allowed Dow-UT to cut

the cost of producing flywheel rotors in half Additionally, the company during and after the award period displayed other accomplishments:

H developed a software package that enables better computer design of the

composite flywheel rotors; B contracted with NASA and the U.S. Air Force to develop a composite flywheel for aerospace use; M partnered with SatCon Corporation, a flywheel assembler, on the devel- opment of uninterrupted power supplies (UPS) for satellites;

presented a paper and research results at the 1997 and 1998 NASA/USAF

Flywheel Conferences; and M received a patent, "Energy Storage Flywheel Device"

(No. 5,590,569: filed 6/7/1995, granted 1/7/1997).

COMMERCIALIZATION STATUS:

The automotive industry requires a total flywheel system that costs below

$600, while the most advanced system envisioned by this project would cost more than $1,800. The upward revision in the cost requirement by automakers stalled development work on flywheel systems for automotive applications. Dow-UT determined that these new cost targets could not be met with

the technology under development, and therefore asked that the ATP project be terminated and discontinued its work on rotors for automotive flywheels.

OUTLOOK:

Under contract with NASA and the U.S. Air Force, Dow-UT has found an

alternative application in which to use its knowledge gains developed within

the ATP project. The company's state-of-the-art materials and manufacturing

processes for flywheel technology have shown promise in space applications,

such as for uninterruptible power supply (UPS) for satellites, where cost

requirements are not as restrictive as those of the auto industry. The outlook

is promising for use of the technology in aerospace applications. Auto use

appears delayed.

COMPANY:

Dow-L'nited Technologies Composite Products, Inc. KN Westland Aerospace Inc

15 Sterling Drive

Wallingford, CT 06492-1843

Contact: John Gendreau

Phone: (203) 949-5145 Number of Employees: 3 at project start, 14 at the end of 1997

for automotive applications) would release enough

energy to blow a 2,500-pound car 1,000 feet into the

air.' The safety risks associated with fast spinning

rotors were pointed up by an industrial accident during product tests. The accident highlighted the need

to improve containment structures.

Flywheel Technology for Other Applications

Flywheel technology remains promising for applications other than vehicles. One promising potential

application is power storage for satellites. Space

applications demand extremely low weights since

each pound costs more than $1,000 to send into orbit.

Light, all-graphite rotors are ideal for the expanding

space-use market where material costs are less important than weight factors.

Following the termination of the ATP project,

Dow-UT began a contract with NASA and the U.S.

Air Force to develop a composite flywheel for aero- space use. Dow-UT worked with SatCon

Corporation, a flywheel assembler, on the development of uninterrupted power supplies (UPS) for

satellites. SatCon has aggressively moved into the

space market, creating a new subsidiary, Beacon

' High-Performance Composites, March/April 1996, p. 25

264 APPENDIX B
Corporation, to manufacture and distribute flywheel

energy systems.'' Tills work continued following the

acquisition of Dow-UT by GKN Westland Aerospace

in the fall of 1998. Researchers that were formerly

with Dow-UT have been able to apply the combined

use of polar weaving and RTM to the manufacture of

rotors from all-graphite fibers for these aerospace

purposes. Thus, although the project's automotive

goals were not met, advances have proved commercially useful in other specialized applications higher

up the cost curve.

Knowledge Spillover Benefits

Dow-UT received a patent for manufacturing the

composite rotor that it developed during the ATP

project.' In the aerospace field, Dow-UT was among

the invited industry guests to present a paper and

results at the 1997 and 1998 NASA/USAF Flywheel

Conferences. The combined RTM/polar weaving

method developed by the project has been applied

to the fabrication of rotors for flywheel systems used

as uninterrupted power supplies for satellites.

Sidetracked, but Not Off Track

Dow-UT's effort to develop composite flywheel

rotors was guided by the originally estimated technical and cost requirements of automakers for flywheel

systems to be used in hybrid electric vehicles. DowUT was on track to meet the originally anticipated

requirements. When the cost target was revised

sharply lower, however, Dow-UT decided it could

not meet the automakers' more demanding requirements with the technology it was developing.

Consequently, it decided to terminate the project

early, with ATP's concurrence. Cost effectiveness of

flywheels for automobile use was not reached.

Process technology that was developed by DowUT researchers in the ATP project has since found

another application: the fabrication of flywheel rotors

for flywheel systems used as uninterrupted power

supplies for satellites. In this application, the cost

requirements are less demanding. Further progress

in developing flywheel technology in the aerospace

area may later feed back to applications in the automotive industry.

Battery mid EY Technolog), July 1997.

' Energy Storage Flywheel Device," patent number 5590569, January 7, 1997.

APPENDIX B 265
(
Project-Performance Rating System

Status Reports—First 50 Completed Projects

JLrepa p. reparation of the overview of the 50 projects included development of a first-generation project performance

rating system for 1) knowledge creation and dissemination, 2) commercialization progress, and 3) overall project

performance. The rating system was constructed primarily from a set of common project outputs, several of

which are used as performance metrics in partial fulfillment of the reporting requirements of the Government

Performance and Results Act (GPRA),^ to which is added an analytical assessment of outlook for the continued

progress of each project.

The scores for knowledge creation and dissemination

are constructed from the following metrics: a) awards by

third-party organizations recognizing the excellence of

ATP-funded technology, b) publications and presentations, c) patents filed—granted and not yet granted,

d) collaborative activity of awardees as a proxy for trans- mission of information outside the walls of the project

through organizational interactions, and e) commercialization or near commercialization by award recipients of the

technology as a proxy for whether knowledge dissemination

is occurring through observation and reverse engineering.

The scores for commercialization progress are constructed

from the following metrics: a) attraction of additional

investment capital by innovators in the post-ATP period,

b) commercialization or near commercialization by award

recipients of the technology, c) employment gains,

d) awards by third-party organizations in recognition of

small-company business performance, and e) analysts'

assessment of the outlook for continued progress by ATP

award recipients and their close collaborators in applying

the new technologies commercially.

The ratings for overall performance are constructed by

combining the knowledge creation and dissemination

scores and the commercialization progress scores. The

combined score is converted to a zero-to-four star rating.

Four stars is the highest performance score, and zero stars

is the lowest. Two stars is a medium performance rating

signifying neither particularly weak nor strong performance.

The table on the next page summarizes the results of this

performance rating system applied to the first 50 projects.

The rating system presented here should be viewed as a

prototype. Future status report studies may improve and

extend the system. Similarly, the performance rating scores presented here should be taken merely as indicative of project performance as of the date the individual project assess- ments were made, i.e., as of late 1998 for the group of 38

projects published originally in the previous status report

volume^ and repeated here (data set A in table), and as of

late 1999 and early 2000 for the group of 12 new projects

(data set B in table) added here to the 38 to comprise the

first 50 completed projects. The conditions of these projects

may have improved, worsened, or remained essentially the

same since the data were collected.

As was explained in the text, the scores do not measure ulti- mate national economic benefit, although low scores would

cast doubt on the likelihood that the project will attain the

' The ATP, like other federal programs, is subject to the evaluation requirements of the 1993 GPRA. The GPRA resulted from a bipartisan effort to improve accountability, productivity, and effectiveness of federal programs through strategic planning, goal setting, and performance assessment

^ Long (1999).

APPENDIX C 267
ATP Project Performance Ratings—First 50 Completed Awards

Project No. Organization Data Set Overall Project Success;'

90-01-0154 A Collaborative Effort to Address Advanced Technology Needs

of the U.S. Printed Wiring Board Industry (National Center for Manufacturing Sciences, AT&T Micro Electronics, Lucent

Technologies, Inc., Texas Instruments, Inc., Sandia National

Laboratories, Allied Signal Laminate Systems, Hughes Aircraft Company, IBM Corporation, United Technologies Corporation/

Hamilton Standard Division)

91-01-0146 High-temperature superconducting coils for electric motor

efficiency (American Superconductor Corp.)

91-01-0184 Three-dimensional anatomy of human body, with animation,

for medical training (Engineering Animation, Inc.)

91-01-0243 A patient-friendly approach to human cell transplantation

(Aastrom Biosciences, Inc.)

91-01-0256 Process for growing large, single silicon carbide crystals

(Cree, Inc.)

92-01-0133 Prostheses made of biomaterials that regenerate body parts (Tissue Engineering, Inc.)

93-01-0085 A New Bioabsorable Polymer: The Ideal Material for Medical

Implants.? (Integra LifeSciences Corporation)

94-06-0024 A user-friendly programmer's tool for writing parallel-processing software (Torrent Systems, Inc.)

90-01-0064 Thallium/lead thin films for advanced superconducting

electronic devices (E.I. Du Pont de Nemours & Company)

90-01-0166 Computer RAM chips that hold memory when power is off (Nonvolatile Electronics, Inc.)

*

91-01-0177

91-01-0224

91-01-0262

92-01-0017

92-01-0115

92-01-0123

92-01-0136

A systems solution to a quality problem in auto body manufacturing (Auto Body Consortium; CDI-Modern Engineering;

Classic Design, Inc.; Detroit Center Tool, Inc.; ISI Robotics; Perceptron, Inc.; Pioneer Engineering and Manufacturing;

Progressive Tool and Industries, Inc.; Weber Technologies,

LLC; Chrysler Corporation; General Motors Corporation,

Technical Center; University of Michigan; Mechanical

Engineering; and Applied Mechanics)

Powerful software for designing new molecules and

therapeutic drugs (Molecular Simulations, Inc.)

Joining several chips into one complex integrated circuit (Kopin Corporation and MCC, Inc.)

Using high-temperature superconductivity to improve cellular phone transmission (Illinois Superconductor Corporation)

Lowering the cost and improving the quality of computer chips

(Diamond Semiconductor Group, LLC)

Smart Window Technology (SAGE, Inc., 3M Company)

Harnessing cheap diode lasers to power a low-cost surgical

laser (Cynosure, Inc.)

A

A

A

B

* Projects are listed by number of stars; where projects have the same number of stars they are listed by project number.

APPENDIX C
. Project No. Organization Data Set Overall Project Success*

I 93-01-0071 Machines that See 3-D (Perceptron, Inc.) B

1 93-01-0113 Searching for New Enzymes in Deep-Sea Microorganisms

1

93-01-0124

1

Gallium Arsenide: A Faster Alternative to Silicon for Microprocessors and Telecommunications Applications

(Vitesse Semiconductor Corporation) B ^^^^^^mKM

94-01-0115 Pit Depth Modulation: Multiplying the Capacity and Speed

of CDs and DVDs (Calimetrics, Inc.) B

90-01-0060

90-01-0121

90-01-0210

90-01-0212

90-01-0232

91-01-0034

91-01-0088

91-01-0142

91-01-0187

91-01-0261

91-01-0263

92-01-0022

92-01-0053

92-01-0074

93-01-0211

93-01-0250

A Technology Boost for U.S. Manufacturers of Flat Panel

Displays (American Display Consortium; Photonics Imaging,

Inc., Electro-Plasma, Inc., Kent Display, Inc., Westinghouse

Norden Systems, Inc., Planar America, Inc.)

Precision mirrors for advanced lithography (Lucent

Technologies Inc.)

Computer recognition of natural handwriting (Communication

Intelligence Corporation)

Exploiting alexandrite's unique properties for a less-expensive, more-reliable tunable laser (Light Age, Inc.)

Better precision for machine tools through thermal-error

correction (Saginaw Machine Systems, Inc.)

Robot navigation technology (HelpMate Robotics, Inc.)

Recycling mixed plastics (Michigan Molecular Institute)

Manufacturing technology for high-performance optoelectronic

devices (AstroPower, Inc.)

A process for making ceramic parts (AlliedSignal, Inc.)

94-01-0063

Plasma Technology for Production of Low-cost Diamond Film

(Westinghouse Plasma Corporation, SOS Tool Company)

A feedback-controlled, metallo-organic chemical vapor

deposition reactor (Spire Corporation)

A gas method to "dry" clean computer-chip wafers (FSI International, Inc.)

Mathematical technologies to restore or enhance movies

(Mathematical Technologies Inc.)

Making low-cost, high-quality glass microlenses at low

temperature (Geltech Inc.)

Chinese character-recognition methods for computer data entry

(Communication Intelligence Corporation)

Highly sensitive detectors for biomedical and environmental

diagnostics (BioTraces, Inc.)

On Time with Rail-Traffic Optimization Technology

(Union Switch and Signal, Inc.)

APPENDIX C 269
ATP Project Performance Ratings—First 50 Completed Awards, continued..

Project No. Organization Data Set Overall Project Success*

91-01-0258 Electronic Muscle: Advanced Microelectromechanical

Systems (Microelectronics Center of North Carolina) B

91-01-0267 New models to speed the development of electronics components (freAmp Consortium; Boemg Company, Uerense

and Space Group; Hughes Aircraft Company; Martin Marietta

Corporation, Electronic Information and Missiles Group; and

Rockwell International Corporation, Collins Avionics and

Communications Division) A

93-01-0109 Flat Fluorescent lamps for display (Thomas Electronics, Inc.) A

90-01-0126 Large-scale diode-array laser technology for x-ray lithography

(Hampshire Instruments, Inc.; McDonnell Douglas Corporation, now merged with Boeing Company) A

91-01-0017 Methods for making new optical switches (IBM Corporation) A

91-01-0025 New materials for new-generation thermal insulation (Armstrong World Industries, Inc.) A

91-01-0071 Bioengineering of a safe, organic/chemical insecticide (Thermo Trilogy Corporation) A

91-01-0135 Reducing viral contamination in donated blood

(Aphios Corporation) A

92-01-0055 Expanding the number of light signals in an optical fiber ^BBi!

(Accuwave Corporation)

P

A

92-01-0103 Insulating Foams for Microelectronics (IBM Corporation) " B

92-01-0122 Packing more data into optical data-storage disks (ETOM

Technologies, Inc.) ^^^^^A

92-01-0124 Low-cost night vision technology (NetOptix Corporation,

formerly Galileo Corporation) A

large benefits originally envisioned, and high scores would

convey continued strong expectations that the project is on

track to deliver large benefits. Projects with the same scores

are not necessarily equal in their benefits potential or in the

value of their achievements to date. Similar scores do,

however, suggest roughly comparable levels of project outputs and outlooks for the future at the time the projects were assessed. Both the absolute values and the relative

positions assigned to the individual projects in the table

could change in the future.

DETAILS OF SCORING SYSTEM

Knowledge Creation and Dissemination: This score is constructed in two parts—1) Knowledge Creation and 2)

Knowledge Dissemination, and the two parts are combined.

The Knowledge Creation part of the score is

calculated as follows:

Technical Awards — The number of technical awards for

the 50 projects ranged from 0 to 4. Because the outside

recognition of technical excellence is considered a good

indicator that significant new knowledge has been created,

the count of such awards forms one part of this score and

each award received is counted fully. Thus, the weight in

the raw scores for this element among the 50 projects also

ranged from 0 to 4.

Patent Filings — The presence of a patent filing is taken

as an indicator that new knowledge has been created.

The number of patent filings among the 50 projects

270 APPENDIX C
ranged from 0 to 26. Patent filings are set to add to the raw score at a sharply declining rate, calculated as 0.5

times the square root of the number of additional patents.

The weight in the raw score for this element among the

50 projects ranged from 0 to 2.5.

Publications and Presentations — The existence of a publication or presentation is taken as another indicator that

new knowledge has been created. The number of publications and presentations ranged from 0 to 214 among the

50 projects. Publications and presentations add to the raw

score at a rate calculated as 0.5 times the fourth root of

the number of publications and presentations. The aim

is to give only a small additional credit to the raw score

for numbers in excess of one. The resulting weight in the raw score for this element among the 50 projects ranged

from 0 to 1.2.

Product Now or Expected Soon — New product or process

is taken as another indicator that new knowledge has been

created. The number of products, now or expected,

ranged from 0 to 5. Having product now or expected is

set to add half as much to the raw score as does a technical

award, and the same as does a patent filing or a publication

or patent. But no additional credit is assigned for having

more than one. This decision was made because often

multiple products reflect the same underlying new

technical knowledge.

Total Knowledge Creation Raw Score — The raw scores

for the above elements are summed. For the group of 50,

total raw scores ranged from 0 to 4.5.

The Knowledge Dissemination part of tlie score

is calculated as follows:

Technical Awards — Technical awards are also included

in the Knowledge Dissemination score because they raise awareness of the new technology and thereby may stimulate others to seek knowledge about it. However, the

award does not itself convey much detailed knowledge.

Therefore, this element is given only a small weight in the raw score. Calculated as 0.25 times the square root of the

number of technical awards, the first award counts as 0.25

in the raw score. For the group of 50 projects, the maximum number of technical awards is 4. Thus this

element ranges from a value of 0 to 0.5 in the raw score.

Collaborations — The following forms of collaboration were taken as indicative of knowledge flows from the

innovators to others via contact among scientific and technical researchers and managers: a) R&D collaboration with

nonuniversity organizations, b) collaboration for commercialization, and c) close university ties. Projects were

assigned a score from 0 to 3 points depending on how

many of these forms of collaboration they had. Note that

these forms of collaboration observed for the project participants are used here as a proxy for collaboration with

others outside the project leading to knowledge flows.

Patents — By disclosing information, patents serve to disseminate project knowledge. Patents are set to add to the

score at a declining rate. The raw-score value of the first

10 patents is calculated as 1 times the square root of the

number of patents, and patents in excess of 10 contribute to

the score at the rate of 0.1 times the square root of the number of patents greater than 10. The weight of this element

in the raw score among the 50 projects ranged from 0 to

3.6. The decision is to give very little weight to additional

patents in excess of 10 in the scoring system, and perhaps

further analysis of patents as disseminators of knowledge

will support a different decision.

Publications and Presentations — Publications and presentations are treated the same as patents in calculating the

score for knowledge dissemination. Their weight in the

knowledge dissemination raw score for the 50 projects

ranged from 0 to 4.6. In both cases, the influence on the

overall scores of extremely large numbers in just several

of the projects is greatly moderated by the calculation

procedure that is used.

Products and Processes Now or Expected — Products and

processes are included in the knowledge dissemination measure because they embody the new know-how, and

technical knowledge can be extracted through inspection

and reverse engineering of products. They are assigned

less weight than publications and presentations and

patents, however, because they convey the knowledge

less explicitly. This element is calculated as 0.5 times

the square root of the number of products.

APPENDIX C 271
Knowledge Dissemination Raw Score — The components

of the knowledge dissemination score are summed to calculate the aggregate raw score. The aggregate raw score

for the 50 projects ranged from 0.7 to 9.4.

Commercialization Progress: The commercialization

progress part of the score is calculated as follows:

Products and Processes Now or Expected — Having a product or process is assigned a greater weight than having

any one of the other elements comprising this total score. Having a single project or process, now or expected, is

assigned a raw score of 4.25. Additional products add at a

rate of 1.25 times the square root of the number of products and processes. Their weight in the raw score for the

50 projects ranged from 0 to 5.8.

Capital Attraction — Attracting capital in any of several

ways, such as from private investors, from other government sources, or through collaborative commercialization

agreements with other investing companies, was assigned

a value of 3 points in computing the raw score—less than

having a product or process. Because of the lack of information about the relative amounts of capital attracted from

various sources for the different projects and the terms of

use, no attempt was made here to assign different weights

for attracting different sources or amounts of capital.

Moreover, the weights were not additive for attracting

multiple types of capital. The weight for this element in

the raw score for the 50 projects was either 0 or 3. Further

refinement of how this metric is included in the scoring

system may be possible.

Employment Gains — Employment data were recorded at

the project start and near project finish by project analysts,

but only for small, single-applicant projects. The data were not provided for most other single-applicant projects

and none for joint-venture projects. A value of 1.5 is

assigned for this element to those types of projects for

which data were not collected to reduce the bias against

them in the scores. This again is a place for further possible refinement to the scoring system. In the case where

a small-company leader of a single-applicant project had

gone bankrupt, a negative value of -6 was assigned as the

raw-score weight—rather than a zero employment gain

to signal that there is a serious impediment at this time to commercial progress. If employment for a small-company

leader of a single-applicant project increased 50 percent or

less, it is assigned a weight of 0 in the raw score. If the

employment for this type of project increased more than

50 percent, a weight of 2.5 times the fourth root of the

gain in excess of 50 percent was assigned. The objective

of this method of scoring is to give a relatively strong

weight to those projects that exhibited large employment

growth among company leaders, but not to have this one

factor dominate the other elements in the total scores (which otherwise would have happened in the face of

growth rates ranging nearly as high as 2000 percent for

several of the projects). Using this weighting system, the

weights for employment gains in the raw scores for the

50 projects ranged from -6 to 5.2.

Business Awards — Business-related awards were included in computing commercialization progress scores because they generally signal unusually strong business

strength or acumen on the part of the project leaders.

For business-related awards, a raw score of 0 is assigned

for no awards and 3.25 for one award, less than commercialized product or process based on the new technology,

but slightly more than attracting capital. Additional

awards are set to increase the raw score at a rate of 0.25

per additional award (i.e., only partial credit is given

because additional awards largely signal the same factor

of relative company strength). The number of business

awards among the 50 projects ranged from 0 to 3. The

weight for this element in the raw scores for the 50 projects

ranged from 0 to 3.8.

Outlool< — The qualitative outlooks for the individual

projects described by analysts in chapters two through

six were translated into values from one to four by the

developer of the prototype performance rating system.

Hence, the values for this element are strongly analytical.

If the analyst described the outlook as highly promising,

excellent, or on track, the project outlook was assigned

a value of 1 to indicate a strong outlook. If the analyst

described the outlook as promising but with reservations

or qualifications, or as indeterminate, the project outlook was assigned a value of 2 to indicate an outlook neither

strong nor necessarily poor. If the analyst portrayed a pessimistic outlook, or if the leading company had gone bankrupt or was experiencing severe financial difficulties, the

project outlook was assigned a value of 3 to indicate a poor

outlook. To convert the outlook rating system to values

272 APPENDIX C
that would be compatible with the performance scoring

system, an outlook value of 1 was assigned a raw score of

+4; an outlook value of 2 was assigned a raw score of 0; and an outlook value of 3 was assigned a raw score of -4.

Commercialization Progress Raw Score — The components are summed for the aggregate raw score. For the 50

projects, the aggregate raw score ranged from -10 to 21.7.

Overall Performance Rating — A combined raw score for

knowledge creation and dissemination and commercialization progress of zero or less, resulted in the assignment of

a final score of zero. Projects with combined raw scores

greater than zero were divided into four groups, corresponding to the four-star rating system. Scores equal or greater

than four are assigned four stars; scores equal or greater

than three but less than four are assigned three stars;

scores equal or greater than two but less than three are

assigned two stars; and scores equal or greater than one

but less than two are assigned one star.

Again, the reader is reminded that the performance ratings

shown in the table are based on the projects observed at

a time in the past, and their conditions may have since

improved, worsened, or remained essentially the same. Future updates on subsequent project developments may

result in changes in their performance ratings. In addition,

the reader is cautioned that the first-generation perform- ance rating system presented and applied here may be

refined in the future, and the absolute values and relative

positions assigned to the individual projects changed.