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When an invention appears potentially patentable, the inventor should consult with a patent attorney without delay. Often, the patent attorney will advise that a patent application be prepared and filed promptly before the invention is publicized, used in public, or offered for sale. If such advice is not sought or followed, some patents issued in the United States may be susceptible to being invalidated later on for one of several possible reasons. Inventors of emerging technologies such as microsystems and nanotechnology are vulnerable to that scenario.

For example, if it is determined that an invention was in “public use” or “on sale” (e.g., sold or offered for sale) in the United States more than one year prior to the date an application for a patent was filed, then a patent issued from that application may be invalidated under the “in-use bar” or the “on-sale bar” of U.S. patent law. In these circumstances, an inventor may overcome an assertion of invalidity of the patent by showing that the public use or the sale/offer for sale of the patented device was “primarily an experimental use.”

Experimental use may take place when an inventor feels that it is desirable to test the invention under actual operating conditions or in an environment where the invention is likely to be used. In such cases, there is a risk of a future challenge to the validity of a later issued patent for the invention. However, the risk may be minimized by following at least some of the 12 guidelines listed after the summary of the recent court opinion below.

A judgment of invalidity of U.S. Patent Nos. 5,169,242 and 5,567,056 under the on-sale bar was affirmed in Electromotive Division of General Motors Corp. v. Transportation Systems Division of General Electric Co. The Court of Appeals for the Federal Circuit concluded that the inventions claimed in the patents were the subject of commercial sales to several railroad customers more than one year prior to the dates of application for the two patents. The question was whether the circumstances surrounding each of those sales objectively showed that the sales were “primarily made for experimentation.”

In concluding that there was insufficient objective evidence to prove that the sales were primarily for experimentation, the court referred to a list of 13 objective factors in an earlier case, Allen Engineering Corp. v. Bartell Industries. After noting that the list is not exhaustive and that all factors may not apply in a particular case, the court held that two factors are “critical” and must be proven if experimentation is to be found – the inventor’s control over the alleged testing, and a customer’s awareness of the purported testing. Since the patent owner did not produce adequate evidence of either of these critical factors, both of its patents were held invalid. (If both critical factors had been shown, the court would have considered the rest of the 13 factors listed in Allen Engineering.)

In reaching this decision, the court discussed the types of evidence needed to prove that a pre-critical date sale (i.e., a sale/offer for sale more than one year before the patent application was filed) was “primarily made for experimentation.” The list of 12 guidelines below is based on the court’s discussion of what the inventors and patent owner did not do. Doing at least some of the following actions should establish the inventor’s control and customer awareness of the inventor’s testing:

  1. Document the fact that the invention is being provided to the customer for the purpose of testing the invention in actual use rather than as part of a commercial sale.
  2. Have the customer sign a confidentiality agreement or other agreement consenting to participate in a field program.
  3. Provide protocols to the customer directing their use of the invention.
  4. Supervise or restrict the customer’s use of the invention.
  5. Require the customer to operate the invention under specific conditions.
  6. Monitor the conditions under which the customer uses the invention.
  7. Require the customer to provide feedback, such as comments or data concerning the operation or durability of the invention.
  8. Have the inventor, or someone under his direction (e.g., the customer), collect data, keep progress reports, and operate the invention during specified times.
  9. Maintain records of the testing or require the customer to do so.
  10. Control, monitor, or systematize the field testing of the invention.
  11. Examine the invention being tested in the field on a schedule.
  12. Consider discounting the price of the invention sold for the purpose of experimentation.
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James J. Kozuch is a partner/shareholder at Caesar, Rivise, Bernstein, Cohen & Pokotilow Ltd. in Philadelphia. He can be reached at [email protected].

The fast changing world of micro and nanotechnology development demands that its businesses focus on their core products and services. At the same time, many of these companies have personnel requirements that demand time and expertise – both often in short supply at startups and small companies.

In some cases, outsourcing vendors that can deliver high service levels and predictable outcomes for non-core business processes provide a solution. With the right outsourcing partners in place, businesses are free to focus on the areas that directly affect the bottom line, such as R&D, manufacturing and quality controls.

In the area of employee and human resources (HR) services, professional employer organizations, or PEOs, can serve as HR outsourcing partners. There are now some 700 PEOs in America serving businesses in all 50 states. Careful selection of a PEO is key. Here are some tips on what to look for in a PEO.

A variety of HR services. PEOs perform functions similar to those assigned to in-house HR departments of large companies. These functions include: payroll preparation and reporting, time and attendance tracking, payroll tax filings, W-2s, garnishments, Internal Revenue Service and state inquiry management, policy and handbook development, unemployment administration and disability management. PEOs also handle all federal and state postings, equal employment opportunity reporting and compliance with workplace legislation. PEOs also manage Workers’ Compensation insurance administration and claims management, Employee Practices Liability Insurance and work site safety assessments.

More choices, more perks. PEOs may bring benefits and economies of scale to their affiliated companies and their employees. Among the benefits PEOs offer are cafeteria plans affording employees choices regarding their medical insurance, dental and vision coverage, options such as flexible spending accounts and health savings accounts and various insurance plans. Investment-related benefits include 401(k) plans and Web-based portfolio administration. Many PEOs offer secure, password protected Web sites for benefits and claims information, and online access for employers.

Under the category of Employee Assistance Programs, PEOs provide their clients with legal assistance, college savings, scholarships and tuition, adoption assistance, addiction and recovery services and wellness programs. Other possible perks: store and health club discounts, movie and theater tickets, travel promotions, transit checks and qualified parking.

Accreditation and other protections. Over the past decade, PEOs have raised the standards within their industry. Exemplifying the heightened emphasis on quality assurance is the Employer Services Assurance Corp. (ESAC). It can be likened to what the Federal Deposit Insurance Corp. and Security Investors Protection Corp. are to the banking and securities industries, respectively.

ESAC is an independent, non-profit organization designed to protect businesses and employees served by PEOs. It is led by a board of experienced regulatory professionals and is an accreditation and financial assurance governing entity for PEOs. ESAC-accredited PEOs are covered by a $1 million bond held in trust by a national bank and a $4 million umbrella bond to cover any claims in excess of the $1 million bond held for each PEO. Since its formation more than 10 years ago, there have been no defaults by ESAC-accredited PEOs, unresolved claims or litigation.

Many states also have licensing and certifications requirements that firms should inquire about when making a PEO selection.

Read the fine print. PEOs generate approximately $43 billion by providing a wide range of employment services and benefits through a co-employer arrangement wherein the PEO assumes certain responsibilities and risks along with the affiliated business (its client).

As part of the arrangement with a PEO, clients remain responsible for compliance with various laws. For example, they must comply with regulations that require a safe and healthy workplace. They must not violate laws governing discrimination and retaliation. Their PEO will guide and advise them to make sure that they comply with the law.

Charges for the service can vary and are determined by the service agreement negotiated with the PEO. Some PEOs will charge a fixed amount per employee per year, while others will charge a percentage of payroll. A client must make certain that all charges are spelled out clearly in the service agreement.

The service agreement should provide the client with an escape clause for reasonable termination of the arrangement, usually with a 30-day notice. Clients dealing with a PEO that is certified by ESAC are protected by a bond in the event that their PEO fails to meet its financial obligations, including the payment of taxes and health insurance premiums. For more information about ESAC-accredited PEOs, visit www.ESACorp.org. For more information about PEOs, visit: www.napeo.org.

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Barry Shorten is executive vice president of The Alcott Group in Farmingdale, N.Y. He can be reached at [email protected].

Being a numbers person, I’m always looking for meaning in data. The recent IBF Nanotech Investing Forum in California provided new information that begs some analysis.

Here’s the quandary: Venture capital funding for nanotechnology went from $196 million in 2004 to $434 million in 2005, according to analysis by David Forman, Small Times associate editor. Attendance at the investing forum was flat, if not lower than last year. The number of startups looking for cash was dismal.

Dollars up, interest down. If more dollars go into the technology (small tech hit $1 billion in venture investing in 2005), why would interest fall?

The first explanation would be that interest in nano investing isn’t falling, but interest in this specific conference decreased due to factors unrelated to investing drive – poor speakers, disorganization, etc. That would be understandable, but everyone I spoke to thought the conference had been a stellar event in past years. Palm Springs, golf, sunshine, great networking, solid programming – what isn’t there to like?

So, if it wasn’t the conference itself, then we are led down a path many of us would rather not go. Did interest in nanotechnology venture investing already hit its peak? Or is this just an evolutionary trend in which we move from broad technology to specific market applications? Or is this conference just a fluke?

Nano isn’t for the faint-hearted. First, no one can agree on what it is. Is Intel nano or not? What makes a property novel? Second, it is complex. It’s hard enough to understand how things act, react, move and behave in the normal world, let alone try to create products in a realm where those laws no longer apply.

Did I mention that conclusive toxicology studies aren’t available? Who cares if there are thousands of products on the market that are toxic (for example batteries and cleaning supplies) if nano gets a bad public rap like genetically modified foods?

We haven’t talked returns yet. Venture capitalists like big exits. Too bad they are few and far between for nano companies to date and the future prospects are not that hot. On the IPO panel I sat on at the conference, the highest expert projection was four nano IPOs this year. I think we will have to stretch our definition of what is classified as a nano company to get that count.

Time to market doesn’t work in nano’s favor when it comes to venture capital. It takes lots of capital and a commitment to many rounds of financing. Five to seven years is average for most nano companies – with the exception of clinical trial products, which may come to market in our children’s lifetimes. It is a long, long road when Food and Drug Administration approval is thrown in the mix.

We didn’t even tackle the question that gets many people rabid: Is there really a nano market? Or is nano just a platform technology that has no meaning without a vertical industry application. If you are a tool company, you may not care what vertical you are selling into, but only that your prospect is doing nanoscale research or manufacturing that requires processes and equipment unique to the technology. Some venture capitalists say there isn’t enough upside potential in tool companies to make it worth an investment, though.

While I’ve spent most of my column discussing why venture capital isn’t a great fit for nanotechnology, this isn’t a recent conclusion. Our tracking of the space over the years has shown that a very small percentage of companies are venture-backed. This is an area where early hype drove a lot of curiosity and interest. But the players with expertise and risk tolerance have stayed, thus the series of large follow-on rounds in 2005. Many of the interested, but not invested, will move on to the next fad. Can anyone say clean tech?

I wish nano was continuing to be a hot investment trend, but it isn’t surprising that the bloom is fading. Deep vertical venture capitalists will invest in the technology when it makes sense for the industry. Corporate players will invest, acquire and partner with the companies that will best further their long-term goals. And government will continue to feed the valley of death funding for at least the short term.

I’m trying to be realistic about the “bubble” that always seems 18 to 24 months out. Nanotechnology is here to stay. Venture dollars flowing to the space will continue to grow. There are endless applications and opportunities for nanotechnology to improve and revolutionize our lives. However, the growth in “nano” investing as a specialty is reaching its peak. Those who can stomach the ride will remain.

Patti Glaza is vice president and publisher at Small Times. She can be reached at [email protected].

Team Phonak has a message for the other cyclists racing in the Tour de France this summer: Eat our dust. That is, if their 15-pound BMC Pro Machine bicycles churn up much dirt during the 2,256-mile marathon journey that begins in Strasbourg, France.

The Pro Machine owes its featherweight status to Easton Sports, which engineered and manufactured the frame using a carbon nanotube-based material called CNT Nanotechnology. Carbon nanotubes give the frame its needed strength and stiffness without the weight of traditional materials.

“Durability improves with the use of CNT Nanotechnology,” said John Harrington, vice president of Easton’s bicycle division. “The weak link is the epoxy. Nanotubes strengthen the resin in the matrix.”


The BMC Pro Machine weighs about 15 pounds and retails for $3,650. Photo courtesy of Phonak Cycling Team
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Working with the nanotech company Zyvex, Easton found a way to evenly disperse nanotubes into resins that could be formed in components such as seat posts and forks. Easton introduced its CNT Nanotechnology frame in 2005, which the Swiss-based Team Phonak used in the Tour de France.

Easton customer BMC showcased the frame with its new Pro Machine bicycle during the Eurobike show in August, and won a gold award for design at the show. Team Phonak will ride the commercially available Pro Machine at this year’s Tour de France.

“We’re shipping now to the dealer,” Harrington said. “The sales have been really good. We can’t keep up.”

As a former racer and biking enthusiast, Harrington knows how the slightest advantage could mean victory for the 26 cyclists in Team Phonak. While they climb grueling mountain slopes, he’ll be in a race of his own. “It’s a never-ending chase to be lighter, stiffer, stronger.”
– Candace Stuart

Doggone.

AIBO, the robotic dog that barks, plays fetch and follows commands, is being discontinued. Sony confirmed in late January that it no longer manufactures the mutts, whose canine capers were achieved in part with MEMS sensors.

“Sony as a whole will be focusing on three core business domains: electronics, games and entertainment, with an emphasis on profitability and strategic growth opportunities,” wrote Kirstie Pfeifer, a spokesperson for Sony Electronics Inc. AIBO, with a pedigree that dates back to 1999, apparently made piddling profits even though it cost one to two grand a pup. “In light of this focus, it has been decided to discontinue the AIBO business.”


As one of the 2005 litter, this AIBO model was among the last available to buyers. Photo courtesy of Sony
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AIBO created a special breed of pet enthusiasts. Owners have formed clubs, organized races and traveled to international gatherings to show off their version of man’s best friend. To entice buyers, Sony infused more and more intelligence into the bloodline. The latest generation understands more than 100 English words as well as a smattering of Spanish.

While AIBO is headed for extinction, some of its DNA may live on. Pfeifer said Sony will continue to do research and development on AIBO’s sound recognition, visual recognition and other technologies that could be applied in future products.
– Candace Stuart

Making the various patent systems of the world work more effectively together is a perennial concern. They have differing criteria, grant protection for different periods of time, and only cover their own geography. That poses challenges in an age when companies source products on a global scale and seek to address worldwide markets. Would it be better if patent offices were more alike? Small Times’ David Forman asked four experts from different countries how the globalization of intellectual property impacts micro and nanotechnology.

Q: Do your clients in the micro/nanotech sector currently file for patent protection in a variety of countries? In your opinion, which systems work best? Why?


Donald Featherstone
Director
Sterne, Kessler, Goldstein & Fox
Washington, D.C.
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FEATHERSTONE: Our clients within the micro/nanotech sectors generally seek protection abroad. Most commonly our clients file within Europe and Japan because of the overall market importance of these regions and their well established patent systems. Additionally, nanobio clients also tend to file in China and India because of their large populations, while nanoelectronics clients tend to also file in China, Korea, Taiwan and Singapore to target manufacturers. While there is room for improvement in patent systems throughout the world, we have found that the EPO (European Patent Office) and JPO (Japan Patent Office) systems work reasonably well, which is likely a reflection of their experienced examining corps.

KREYE: Clients from the nanotech sector usually are looking for broad protection. Thus, if possible they like to file in Europe, the U.S. and Japan. China is also becoming increasingly important. However, some companies in the nanotech field are small research entities and don’t have the financial capability to seek broad global protection. I usually recommend to those clients to file a German national application and within the priority deadline a PCT (Patent Cooperation Treaty – a global IP collection hosted by the World Intellectual Property Organization) application. This saves costs at the beginning and at least ensures that they can claim a good priority.

SUSTRIK: For clients seeking international protection, the PCT filing system continues to be an effective and cost-efficient route. However, the cost of entering national phase at the end of the PCT period continues to be a significant hurdle for many mid-size and startup companies.

WILLIAMSON: Most of our nanotech experience within the firm lies in the optics field, with MEMS devices and the like. We have not encountered any greater variety in the level of service or the competency of examination in this area than in any other sector.

Q: Would your clients benefit from global patent harmonization? If so, how?

FEATHERSTONE: Global patent harmonization needs to occur. However, realistically our current nanotechnology clients are likely to see little if no benefit from current global patent harmonization efforts. The need to harmonize patentability standards is not as great as the need to strengthen global patent enforcement. With stronger and more effective enforcement of patents, our clients are likely to be more willing to engage in joint development with overseas companies and introduce products into other markets sooner.


Boris Kreye
Partner
Bird & Bird
Munich, Germany
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KREYE: This depends a lot on how the system would be harmonized. Some formal aspects are certainly beneficial. Harmonization would strengthen the legal certainty of what can be protected in the different jurisdictions and it could reduce administrative work. Nevertheless, whether such harmonization is really desirable for my clients can only be answered if the would-be regulations are known.

SUSTRIK: Global patent harmonization would be beneficial in simplifying matters – in particular, the issues regarding novelty and prior public disclosure. It should make it easier to develop a global, intellectual property protection strategy and should also provide opportunities to reduce costs.

WILLIAMSON: Global patent harmonization is a very commendable goal and in many ways the patents profession is moving toward harmonization. For example, outside of the area of computer implemented inventions there is really not a great difference between major jurisdictions regarding patentability. I don’t believe that further harmonization would be beneficial to the nanotech sector in particular.

Q. Would there be any negative implications of global patent harmonization? If so, what are they?

FEATHERSTONE: A possible negative consequence of global patent harmonization is that regulators and legislators will lose sight of strengthening and more consistently enforcing patent rights. While developing global patentability standards is laudable, legislators and regulators cannot lose sight of the most important need – better global enforcement.


Gordon Sustrik
Partner
Bennett Jones
Edmonton, Alberta
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KREYE: Global harmonization would likely require global prosecution. Therefore, if a patent is not granted, this would have worldwide implications. Under this aspect many unharmonized patent systems might leave some protection. Besides that, different countries have different standards for patentability. For example, a German patent generally has a higher threshold for non-obviousness than a European patent. What will be the global standard?

SUSTRIK: No.

WILLIAMSON: Harmonization can bring certainty through uniformity. However, we have to ensure that the levels of examination are maintained at a uniformly high level and harmonization does not result in a lowering of standards. The nanotech sector would not benefit in the long term from a flurry of granted patents of dubious validity.

Q. Do you see micro and nanotech patenting activity as unique in any way? Must clients in the micro and nano sector be more attuned to global protection?

FEATHERSTONE: Nanotechnology patenting activity is unique in several ways. Nanotechnology is evolving at a time when the global marketplace is extremely patent savvy. Furthermore, as author Thomas Friedman has observed, the world is far “flatter” today, leading to aggressive global competition. As a result significant interest and resources are being spent globally to secure patent protection by companies – not just in their domestic markets, but throughout the world. Second, nanotechnology is somewhat unique in that it is multidisciplinary and often quite complex, which strains worldwide patent offices.

KREYE: Nanotech patents are unique in a way because the category of claims is an issue. In some areas you have old material but now on the nanoscale that exhibits new properties in a particular application. A wide product claim may not be obtainable because just the size of a material may not be a proper feature to render something new and non-obvious. Thus, only a claim for a specific application could be obtained.


Brian Williamson
Head of patent prosecution
Olswang
London
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SUSTRIK: On a strategic basis, I do not believe there is anything particularly unique to the micro and nanotech patenting activity. There is a need to integrate the intellectual property protection strategy with the client’s development strategy and marketing strategy. The nuances arise from the nature of the business involved. As with other sectors (biopharma, information technology, etc.) important elements of the overall business plan drive specific decisions with respect to intellectual property protection.

WILLIAMSON: I would say that most nanotech applications come proportionately from small research-based startups and young companies. For that reason nanotech companies have to be careful how they spend their money and should perhaps consider foreign filing programs very carefully. I would recommend, as with most clients, that they focus on the industrially and commercially mature markets with a secondary, but regularly reviewed, focus on emerging markets.

Q. Do you feel your country’s system suffers from overlapping patent claims and/or confusion about nanotech? If so, what could be done to remedy the matter?

FEATHERSTONE: Notwithstanding the general shortcomings that plague the USPTO, the USPTO has focused on improving examination of complex nanotechnology patent applications. As a result – with this extra focus – generally the PTO is up to the task of reviewing complex nanotechnology patent applications. Last year our firm conducted a review of the patent prosecution histories of every nanotube patent that issued in 2004. While some issues existed regarding the quality of the examination, we generally found that the examination was solid, and trending in the right direction.

KREYE: I think the EPO has people who are qualified in nanotech but it is a new and undefined field. One should not rely on a specialized and well-trained examiner in the EPO but should take into account that prosecution may take some time. As I said, available prior art and the respective knowledge are a big issue. At the end, experience, number of patents and some technical training are probably the best remedy.

SUSTRIK: The Canadian Patent Office suffers from a general lack of appropriate staffing levels, and from a lack of specialized examiners. As with other specialized fields such as biopharma, the answer lies in hiring individuals who have educational or industry experience in the relevant field. Such individuals can then offer specialized internal training to other examiners.

WILLIAMSON: This is a criticism which has been leveled at new technologies across the board. I remember biotech not so long ago suffering from this complaint. I don’t believe that nanotech applications suffer from poor examination at either the UK or the European Patent Offices. However, as examiners become more experienced, improvements can presumably still be expected.

We show you the money


March 1, 2006

2006 compensation survey reveals salary, benefits trends

By David Forman

So you want to work in nano? Had you said that 10 years ago, you would have been laughed out of the room – or, at least, been greeted by empty stares: Work in what?

But now nano is hot. The technologies are touted as next-generation solutions for energy, health and environmental woes. Government and business leaders from North Dakota to New Delhi promote micro and nano-related development as a way to boost their economies. Investors are increasingly eyeing – and participating in – the space.

As a result, a micro-nano sector that hardly existed a decade ago now offers employment worldwide. Granted, some of it may be relabeled from semiconductor, biotech and other sectors. But much of it is likewise new. What are the trends? In the following pages, you’ll find our first-ever compensation analysis, drawn from an online survey conducted from Dec. 15, 2005 to Jan. 12, 2006.

David Forman, responsible for our quarterly analysis of trends in venture capital investing, compiled and analyzed the survey results.


During a recent 12-month period, NanoOpto Corp. hired three key employees, so its chief executive, Barry Weinbaum, ought to know a thing or two about the market for senior executives.


“It’s a good time for great people,” says Allan Hoffman, tech jobs expert for Monster.com. He says top companies are willing to pay a premium for the best employees. Photo courtesy of Allan Hoffman
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He and other experts say a variety of disparate forces are at work in the micro and nanotechnology job market, depending on the level of the job, the type of position and the domain expertise that the employer desires.

“In searching for a CFO we found the most plentiful candidates,” Weinbaum said. The very definition of success at the job, maintains Weinbaum, guarantees that there will be more people in transition. Chief financial officers who take a company public may decide to return to their entrepreneurial roots rather than grapple with the Sarbanes-Oxley Act. And it is common for CFOs of companies that are acquired to move on to newer pastures.

But on the product development side, the problem was not so much too many qualified candidates to choose from as it was too few with specific market experience.

“It would have been very easy to hire someone from telecom,” said Weinbaum, “but I was dead set on avoiding that background.”

Telecom, in fact, is the industry from which most existing NanoOpto management had come. But Weinbaum was looking for someone with domain expertise that the company did not already possess.

He says eventually finding the right person – in NanoOpto’s case, a vice president of product development with experience developing optical products for the consumer market – has been critical to NanoOpto’s success selling new components for use in cellular phones.


Despite a dramatic increase in business, says Pamela Bailey, president of online job site tinytechjobs.com, “I don’t think the nanotech job market has really happened yet.” Photo courtesy of Pamela Bailey
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Weinbaum’s experience is hardly unique. In fact, the upper echelon of the overall technology sector is currently in the midst of a focus on quality, according to Allan Hoffman, a tech jobs expert for the online job site Monster.com.

“I think we’re seeing that companies are really going for top-notch people and are willing to pay a premium for them,” he said. Hoffman calls it the “Google effect,” referring to that company’s reputation for hiring only the best and the brightest with the most relevant experience.

At the same time, experts say employees are not as willing to change jobs as they were during the tech heyday from the mid-1990s through 2002.

The combination of those two trends means the “right person” for a particular job can “pretty much write their own ticket,” Hoffman said. As for the rest, job hunting remains a very competitive arena. Micro and nanotechnology appear to be just as prone to these dynamics as any other area of tech.

“The little startups want someone who brings all the intellectual knowledge, understanding of the sector and can pull in an experienced group,” said Pamela Bailey, president of tinytechjobs.com, an online job site that specializes in recruiting for nanotechnology, MEMS and microsystems.

In the case of technical leadership positions, she said, “They are looking for senior people, almost all with Ph.D.s.”

At the same time Bailey says she is seeing more mid-level jobs crop up as the area expands – in fuel cells, electrical engineering, semiconductor design and materials science.

She also says that there is global competition. Half of the people applying for jobs on tinytechjobs.com are foreign nationals. The results of Small Times’ 2006 compensation survey concurred: About 28 percent of the respondents on our final list were from countries other than the United States.

In many ways, micro and nanotech are no different than the at-large tech industry, our analysis shows, but we also found a few unique traits. Whether you’re looking to find “just the right person” – or to be that person – the following pages should help you on your way.


Analysis overview

More than 1,300 readers responded to the survey representing 37 countries worldwide, with the majority coming from the United States. Employees in 45 states plus the District of Columbia participated.

The survey asked 29 questions about employee pay and benefits, employees’ educational background and employment history, and the size, type and location of their employers.

The results showed that, as a whole, micro and nanotechnology employees are well compensated and highly educated. On a global basis, the average salary for an employee in micro and nanotechnology is $84,605 per year. In the United States, the average salary is $97,978.

Moreover, 36.7 percent of global respondents reported having earned a degree at the level of Ph.D., M.D., or J.D., while 29.1 percent reported having earned a master’s level degree. In the U.S., those figures were practically the same – 37.1 percent and 29.1 percent, respectively.

The high average salaries also reflected a large participation in the survey by high-ranking executives and engineers. On a global basis, 24.5 percent of the respondents in the survey were C-level or VP-level executives, 21.7 percent were manager level and 35.8 percent classified themselves as engineers, researchers or scientists.

By contrast, only 2.7 percent of the respondents were technicians, 1.9 percent business or sales staff and 6.3 percent college or university professors. Due to the fact that the initial survey includes significantly more data on executives as well as engineers, researchers, and scientists, the resulting analysis offers more detailed information on trends in those categories.

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As for earning power, those who earned the most in the micro and nanotechnology field were partners in legal services firms in the United States, followed by C-level executives in the U.S. and Canada. Those earning the least were researchers in Asia, the Middle East and Eastern Europe.

The final list of responses numbered 969, after weeding out data that lacked any salary, hourly pay or benefits information or that included erroneous information.

Of that total, about 73 percent were from the United States. For that reason, the survey analysis includes more extensive information on the U.S. Wherever possible it also includes global data on micro and nanotech employment in cases when the response rate provided enough information to draw meaningful conclusions.

Most of the analysis is also focused on salaried workers. They provided 817 of the responses, or 84 percent of the global final list. In the U.S., salaried workers were responsible for 590 responses, or 83 percent of the total in the U.S.


Executive compensation – global and U.S.

An analysis of executive compensation in micro and nanotechnology showed some interesting trends, most notably that employees characterizing themselves as presidents, chief executives or managing directors did not on average make dramatically more than their counterparts in other C-level positions, such as chief financial or chief technology officers.

On a global basis, the average salary of a lead executive – that is, a president, CEO or managing director – was $127,729, compared to $111,264 for a chief operating, chief financial or chief marketing officer.

However, the compensation of the lead executive was more contingent on performance. The average annual bonus of a lead executive was $28,007 (about 21.9 percent of the average annual salary), compared to $8,144 (about 7.3 percent) for the COO, CFO or CMO categories.

However, on a global basis, technical domain expertise is highly valued. In fact, chief technology officers and chief science officers earned on average more than lead executives: $148,214, with an average annual bonus of $13,021, which is roughly 8.9 percent.

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The esteem for technical expertise as well as a trend to reward marketing and sales executives with performance-based pay are reflected in the difference between average salary and bonus for different types of vice presidents working in micro and nanotechnology.

Vice presidents of marketing, sales, operations and business development earned on average $110,840; their counterparts in engineering, research and technology earned $123,276. However, the VPs on the business side netted on average an annual bonus of 21.3 percent of their annual salary while the VPs on the science and technology side netted on average an annual bonus of 14.9 percent.

These global trends were reflected in the U.S.-specific analysis as well. However, the average lead executive salary was pulled down somewhat by the plethora of small startups in the micro-nano space. Of the 98 presidents, CEOs and managing directors in the United States who participated in the survey, 68 of them worked in companies with 10 or fewer employees. Of those lead execs, 63 were founders of their companies.

The pay range for founding lead executives of companies with 10 or fewer employees varies dramatically, from $250,000 at the high end to $7,000 at the low end, suggesting that at least for some founders, the position is not their prime source of income.

In order to gauge the earning power of a lead exec who is not necessarily in an entrepreneurial environment, an analysis was done that excluded companies with 10 or fewer employees. In that case, the average salary for a lead executive was $160,852.


Engineer/researcher compensation – global and U.S.

The category of engineer, researcher and scientist received more responses than any other single job title classification in the survey, totaling 347 responses, or 35.8 percent of the workforce. Of the 347 responses, 310 included salary information, while the remaining either did not include salary data or were hourly workers.

On a global basis, engineers, researchers and scientists in micro and nanotechnology earned on average $65,631 a year. The average annual bonus was $2,232, which is about 3.4 percent.

Compensation in the category in the U.S. was somewhat stronger, where the average salary was $79,397 and the average annual bonus was $6,391, or roughly 8 percent.

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Within the U.S., engineers, researchers and scientists earned the most working for companies classified as micro/nano component integrators, where the average salary was $94,056 and the average bonus $6,063. Six other categories were closely bunched, ranging from manufacturer/fabricators, where the average salary was $88,822, to government laboratories, where the average salary was $77,325.

The materials/tool supplier and corporate R&D/laboratory categories stand out for their bonuses. Employees in the former earned on average a bonus of 13.6 percent and in the latter 10.4 percent, well above the other categories, most of which hovered around 7 percent.

Government labs had the stingiest bonuses, averaging just 2.8 percent of average annual salary. However, their average pay ($77,325) was considerably better than that of universities, where engineers, researchers and scientists, earned on average just $48,369.

However, 59 percent of those in universities had been in their positions for three or fewer years, suggesting a large participation of post-doctoral researchers who traditionally earn lower salaries. Without those employees, the average salary jumped to $56,381.


Education – global and U.S.

On both a global and U.S. basis, higher education correlates directly to earning power in micro and nanotechnology.

On a global basis, the 36.7 percent of survey respondents who had earned a Ph.D., M.D., or J.D. also earned the most money. The average salary for the category was $98,919, with an average annual bonus of 8.3 percent. The U.S. figure is slightly higher, with an average salary for a Ph.D.-level employee of $108,452 and a bonus of $9,565, which is approximately 8.8 percent.

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Master’s-level education presented a surprising trend. Workers who had attained a master of arts as their highest degree earned on average more than their counterparts who had attained a master of science, $92,578 compared to $75,818. They earned on average even higher bonuses, $11,292 versus $6,597.

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However, more employees who have scientific education at the master’s level participated in the survey. The broader participation of workers with an M.S. includes employment across a wider range of rank and experience, from high-level managers down to entry-level workers. On the other hand, the M.A. category included a higher percentage of manager and executive level employees but few low-level and entry-level jobs.

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The trend played out similarly in the U.S., where M.A. holders earned on average $101,026 as opposed to M.S. holders, who earned $94,726.

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As far as undergraduate degrees are concerned, however, studying science clearly pays off in micro and nanotech. On a global basis, those whose highest degree is a bachelor of science earned an average annual salary of $77,949, as opposed to $66,937 for holders of bachelor of arts degrees. In the U.S., holders of bachelor of science degrees earned on average $91,237, while holders of bachelor of arts degrees earned $75,004.

Likewise, the technical focus of an associate’s degree translates into dollars, according to the survey results. This is especially true in the U.S., where holders of associate’s degrees earned an average of $82,800, more than those who had earned bachelor’s of arts.


Regional – U.S.

On a regional basis, the average salaries were higher on the coasts and were lower inland. The response rate also showed a higher density of micro and nanotechnology employment along the coasts, as well as in the Midwest region.

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The Northeast and Southeast regions were each responsible for 19 percent of the responses of U.S. salaried employees, while the Pacific region was responsible for 23 percent. Salaries in the Northeast and Pacific regions were the highest overall. The average salary for an employee in the Northeast region was $110,265 and in the Pacific region $106,634.

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Pay in the Southeast was somewhat lower, with the average salary dipping down to $94,320. The Southwest region, which accounted for only 14 percent of the responses, had a higher average salary of $100,559.

Although the Midwest accounted for 20 percent of reported micro-nano employment in the country, the average salary in the region was only $81,603, just slightly above the Rocky Mountain region, which accounted for 4 percent of the responses and had an average annual salary of $77,121.


Age – U.S.

An analysis of age shows that micro and nanotechnology employees are at their peak earning power from their late 50s to late 60s and that earning power declines significantly after that. There are also relatively few employees in nanotechnology in that age bracket compared to those in their 40s and early 50s.

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Employees who earned their bachelor’s degrees in the 1960s posted the highest average annual salary, $132,852. Assuming a graduation age of 22, those employees were approximately between 59 and 68 years of age.

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Slightly younger workers earned less but there was little difference between the earning power of those who graduated in the 1980s and in the 1970s. Those who graduated in the 1970s earned, on average $113,738 and those who graduated in the 1980s earned $112,199.

However, the earning power of significantly younger employees is considerably lower. Graduates from the 1990s earned on average $83,517 in micro and nanotechnology. Graduates of the new millennium earned an average of $59,320.


Benefits – U.S.

Employers in micro and nanotechnology, by and large, offer a wide array of benefits. However, they also are in keeping with national trends toward replacing defined benefit retirement packages with tax-advantaged retirement programs that are mostly funded by the employee.

A full 88 percent of salaried employees in micro and nanotechnology in the U.S. said their employer offers health insurance. In addition, 75 percent offer dental insurance.

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As far as the particular types of health programs that are provided, 55 percent of salaried workers said their employers offer HMOs, 63 percent offer PPOs and 42 percent make health care spending accounts available. (The percentages add up to more than 100 percent because many employers give employees a variety of options from which to choose.)

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Of the 560 U.S. employees who reported what type of coverage they buy, 302, or about 54 percent, purchased family coverage while about 15 percent purchased coverage for themselves and one other family member and roughly 31 percent reported purchasing coverage only for themselves.

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For retirement savings, 72 percent of salaried employees said their companies offer a 401(k) or 403(b) savings program in which employees could put a portion of their income into a tax-deferred account. However, only 60 percent of employees reported that their companies make a contribution to their retirement savings over and above what the employees themselves put into their accounts. By contrast, only 21 percent reported their companies offering traditional defined benefit plans, or pensions.

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Other types of benefits also proved commonplace. Employees reported that 55 percent of companies offer flexible spending plans, 51 percent offer paid short-term disability, and 47 percent offer employee assistance plans for personal issues. However, paid family leave remains less common, as only 34 percent of employees reported that their companies provide it.

Education reimbursement is widely available, with 50 percent of employees reporting it among their benefit packages. Some form of stock options is available to 33 percent of U.S. employees in micro and nanotech.


Hourly wage compensation – U.S.

The compensation survey did not provide enough responses from hourly wage employees to draw conclusions that are as meaningful as those drawn from the responses of salaried employees. However, some trends were nevertheless evident.

There were 64 hourly wage employees in the U.S. on the final list spanning a compensation range from $6.15 per hour to $325 per hour.

The average pay per hour was $88.51, a number that is likely skewed to the high end by greater survey participation from consultants than from hourly technical employees. For example, of hourly employees earning $100 per hour or more, 47.8 percent classified themselves as the lead executive of a company with 10 or fewer employees in the consulting/financial services category.

At the low end of the pay scale there was a preponderance of technicians. Of hourly employees earning $25 per hour or less, 38 percent classified their job title as technician.

There was a generally even distribution of hourly wage employment across age categories and education level. As would be expected, the older and more highly educated employees earned more.

The data clearly show that experience counts. Hourly wage employees who had been in the same position for 11 years or more made on average more than their counterparts who had served less time, as did those who had been with the same organization for more than 10 years.

However, the vast majority of hourly wage employees have been with their current employers only a short time: a full 75 percent have been with their employers for five or fewer years.

Hourly workers were not without benefits: 53 percent were eligible for benefits through their employers and 39 percent were eligible for dental insurance. As for retirement benefits, 37.5 percent of hourly wage employees said their employers offered a 401(k) or 403(b) retirement plan and most of those employers also offered some form of match.

However, other types of benefits were much less common. Only 12.5 percent of respondents reported that their employers offered flexible spending account options and only 20 percent offered paid short-term disability – compared with 55 percent and 51 percent, respectively, for salaried workers.


Changes in compensation – U.S.

Micro and nanotechnology employees are an optimistic bunch, an analysis of changes in salary shows. While only 64 percent of U.S. employees received a raise in 2005, 75 percent said they expected to receive a raise in 2006.

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The trend was more pronounced among employees who received a raise of less than 5 percent in 2005. While 39 percent reported receiving a raise of less than 5 percent in 2005, 47 percent expected a raise at that level in 2006.

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Raises at higher levels were less common and the increase in expectations was not as steep. While 25 percent of employees reported receiving a raise of more than 5 percent in 2005, 28 percent expected such a raise in 2006.

Those who had had their pay cut did not expect it to happen again. Whereas 3 percent of U.S. employees reported a decrease in their salaries in 2005, only 1 percent anticipated a salary decrease in 2006.


Global trends

Whereas the majority of survey responses came from the United States, there was still considerable participation from around the globe, including 270 responses on the final list from employees in 36 countries other than the U.S.

India accounted for most of the global participation, with 23.7 percent of non-U.S. participation, and Canada, with 22.6 percent. Western European countries also posted significant participation in the survey, including the United Kingdom with 6.7 percent and Germany with 4.8 percent. Singapore and China were each responsible for 4.1 percent of participation in the survey.

While participation in the survey may say something about the global distribution of micro and nanotechnology employment, too much should not be read into the data. The survey was conducted online and promoted via Small Times’ online and print publications, and the geographic response rate to a large extent reflects the online and print readership of Small Times.

However, the survey does provide meaningful data about countries from which employees provided a reasonable amount of information.

In the data coming in from India, for instance, the financial benefits of setting up operations abroad are obvious. The average annual pay of a salaried employee in micro and nanotechnology in India was a mere $16,508.

The majority of respondents from India classified themselves in the category of either an engineer, researcher or scientist (43.8 percent of respondents) or as a manager or director of engineering, research or technology (18.8 percent of respondents).

An engineer, researcher or scientist in micro or nanotechnology working in India earned an average annual salary of $8,898. Pay rates in the category spanned a dramatic range, from a low of $500 per year to a high of $120,000 per year. But most salaried employees – 64.3 percent – earned $10,000 per year or less. Managers or directors of engineering, research or technology in India earned an average of $15,850 per year.

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However, survey data show that those salaries are likely to rise. Of employees in India who reported whether their salary changed in 2005, a whopping 78.9 percent received raises while the remainder reported their salaries staying the same. Not even a single employee reported receiving a decrease in compensation.

Of those employees in India who reported salary changes, 54.4 percent had a raise of 5 percent or more. Expectations for 2006 were similarly bullish: A full 81 percent of salaried employees expected a raise of 5 percent or more.

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In Canada, the other country from which employees provided a relatively high response rate, the average annual pay of a salaried employee in micro or nanotechnology was $80,750. Pay ranged from a low of $15,000 to a high of $300,000 per year.

Of the total respondents from Canada, 39.3 percent were engineers, researchers or scientists. They earned on average $48,000 per year. On the executive side, 19.7 percent of respondents from Canada classified themselves as a president, CEO or managing director. They made an average of $137,500 per year.


Clayton Teague
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Last fall, Clayton Teague sat under fire as members of Congress peppered him with questions about nanotechnology’s potential for a big oops: nano-based materials or products that could harm people or the environment. As director of the National Nanotechnology Coordination Office, Teague works with more than 20 agencies that participate in the National Nanotechnology Initiative to ensure communication and collaboration among them.

He’s also the face of nano in Washington, D.C., and abroad. When concerns arise about the adequacy of funding for research on nano’s adverse effects, lawmakers turn to him for answers. When international committees want a representative for global cooperation on nano, they tap his shoulder. Teague is in demand – a lot, as he demonstrates in this exchange with Small Times’ Candace Stuart.

Q: What are the most pressing issues facing the National Nanotechnology Coordination Office in 2006?

One is our expectation of the delivery of the assessment report (on how we can improve the National Nanotechnology Initiative) from the National Academies. That’s supposed to be coming up sometime in the spring. What the report says and how we’ll respond will be at the forefront of what we do.

Q: Is this a follow-up to the President’s Council of Advisors on Science and Technology report that came out last May?

The law requires both an assessment by PCAST and an assessment by the National Academies. There were a number of specific requests in the law that the academies were to address (such as) how we’re doing internationally, how we’re doing in technology transfer.

Q: What are you working on now?

We are working very closely with all the agencies to prepare the next supplement to the president’s 2007 budget, which will lay out the plan that the NNI and participating agencies have for the year 2007.

We laid out a strategic plan about a year ago (including) a very important vision statement with four goals, one of which is the responsible development of nanotechnology. The next step in further refining the strategic plan is to lay out research targets.

Over the next six to eight months that’s going to be a major effort. We hope to identify some very specific targets. Just to give you some examples, one that the NIH (National Institutes of Health) has identified is the $100 genome. The intent is to have all the instrumentation, validation and everything in place so that a person could walk into a clinic with a sample of blood or other sources of DNA, and for $100 walk out with a complete layout of their DNA.

Q: That’s using nanotechnology to accelerate this analysis?

Yes, to use nanoscale sensors, nanotechnology-based instrumentation, to provide this kind of service. Another potential example is to have nanotechnology-based solar cells or photovoltaic cells that are some number of times more efficient than current solar cells and a fraction of the cost.

I give those two examples to indicate the kind of specificity we’re talking about. None of those has been totally agreed upon by the agencies at this point.

We’re pushing very hard (on) the drafting of a document for environmental and health safety R&D. We hope it will be in the final review process in the next month or so. Finally, we will be planning for and conducting a number of public participation activities.

Q: At the House Science Committee hearing in November, witnesses and members of Congress indicated that we needed to put more resources into research on environmental and health effects. But it was unclear where that money should come from.

Almost from the inception of the NNI we placed a very high priority on what we call responsible development of nanotechnology. We meant that you achieve an appropriate balance between investing in R&D to advance the technology and commercialization with research to understand any potential adverse effects or impacts the technology may have for human health, the environment or society.

We really want to expand the knowledge of how we control matter at the nanoscale with the usual goals of strengthening the U.S. economy, supporting national and homeland security, and enhancing the quality of life for all citizens – as well as making our national contribution to improving the health and environment for the world.

Q: But the sense I got from the hearing was that some participants felt there aren’t sufficient allocations right now.

I think that is true, and what I was trying to say when Congressman Bart Gordon kept cutting me off (laughs) is that we identified for ’06 $38.5 million specifically for R&D on environmental health and safety implications for nanotechnology. But that identification was based on a very narrow and strict selection criteria.

We developed a definition that we sent to the agencies and said, “What R&D do you have that meets the criteria.” (The definition: R&D whose primary purpose is to understand and address potential risks to the health and the environment posed by these technologies.)

That’s fairly restrictive. We had earlier tried to make an estimate with a request to the agencies that said, “Tell us what you are doing with nanotechnology implications, applications or fundamental research related to environmental health and safety.” We got back a number that was something like $100 million. We were roundly criticized by some of the NGOs (non-governmental organizations). By including basic research and applications, (they said) that we had appeared to inflate the number.

This time we decided to narrow the definition. By doing so we got back a fairly limited scope of projects. For instance, none of the NIH research on understanding the interactions between nanoscale materials and biosystems is included because its primary purpose is aimed toward improving human health, better diagnostics and better treatment.

Q: Should industry bear some of the financial burden?

I think that is the case. Within the U.S, regulatory system, it is the responsibility of the manufacturers to ensure the safety of their products before they come into the marketplace. The regulatory agencies step in if there is evidence that that has not been the case and the product does prove to be unsafe and have adverse effects on human health or the environment.

Where the money would come from – that is actually a very important policy question. The final funding decisions about what money is going to be allocated where is based largely upon individual agencies. We provide an effective means of communication, collaboration and coordination among the agencies.

If you’re in the tight budget situation that we’re currently in, the most likely way would be for several of the agencies that would be most affected saying, “OK, if we increase funding for the (NIH’s) National Toxicology Program, where would it come from?” No one is probably going to advocate that you draw it from the National Cancer Institute. You have to ask those difficult questions when you think about this.

Q: In its report last May, PCAST encouraged the NNI to facilitate tech transfer from labs into industry. What are you doing on that front?

We organized a second meeting on the regional and state initiatives in nanotechnology. One of the goals is to improve communication to assist in states effectively supporting commercialization at the state and local level.

We keep improving our communications with small and large industries, giving them more effective understanding and knowledge about the research under way at the NNI, and to emphasize the tremendous number of facilities that are being made available for their use.

Q: Many state and local organizations aren’t government funded, so how effective can they be with few resources?

I am not aware of direct federal funding that goes to any of these state initiatives. However, if you look to some of the more successful ones, the state efforts have leveraged (state) investment to get additional support. One example would be Albany in New York.

Q: But not all states have equal resources.

I think that’s true. Certainly it depends on the local economies and their willingness to dedicate significant amounts of their resources toward this.

However, to point out another example where a state took the initiative is Arizona. The citizens decided to increase their sales tax to support educational development, and part of this was the development of facilities to do R&D at universities.

Q: What standards projects are you involved in right now?

I’m primarily involved through the American National Standards Institute (ANSI), who are acting as the administrator and secretariat for the technical advisory group (TAG) between the U.S. standards activities and the International Standards Organization (ISO). I’m serving as chair of the TAG. ANSI is the official representative of the United States to the ISO Technical Committee on Nanotechnologies.

We now have about 50 members. I encourage any industry to join in the ANSI technical advisory group. It is very important that the TAG has as thorough and broad representation across industry, academia and government as we can have. When we go to the technical committee meeting (in Japan this summer), we want to have the best and most solid scientific- and technological-based documents as we can possibly produce. That really holds weight at the international level.


The Teague file

Clayton Teague is director of the National Nanotechnology Coordination Office (NNCO), which was created to provide technical and administrative support for the Nanoscale Science, Engineering and Technology subcommittee (NSET). NSET represents the numerous departments and agencies involved in the National Nanotechnology Initiative. Before joining the NNCO, Teague was chief of the manufacturing metrology division at the National Institute of Standards and Technology. He also has worked on the technical staff at Texas Instruments.

Feb. 28, 2006 – Bell Helicopter selected Honeywell to provide five key avionic products for the new Bell 429 helicopter, Honeywell announced this week. The centerpiece of the avionics is the new KSG-7200 Air Data Attitude Heading Reference System (ADAHRS).

The KSG-7200 is a derivative product from Honeywell’s air transport and business jet markets. The system features Honeywell’s MEMS sensors in place of spinning mass gyros and accelerometers. The sensors’ accuracy eliminates reliance on updates from a global positioning system.

“The selection by Bell Helicopter represents the first helicopter contract award of the solid state MEMS ADAHRS,” said Doug Kult, sales director for light/utility helicopters at Honeywell. “Federal Aviation Administration certification is expected this year.”