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Smart use of fabrics – and the first-mover advantage
Asha Peta Thompson, Intelligent Textiles: "Without our patents, we probably wouldn’t have a company!"
A few years back, company founders Stan Swallow and Asha Peta Thompson created a process of weaving electrical circuits into fabrics such as cotton, wool and polyester. Previous technologies involved fusing multiple layers of cloth. Their fabric, by contrast, is a flat piece of cloth that looks like any other. Of course, it isn't. Woven with conductive fibres and connected to an energy source such as a battery, this high-tech fabric can incorporate heating elements to warm a glove, say, or use sensors that respond to pressure to make a computer keyboard from a piece of cloth. Soon after inventing the technology, the founders patented the process and started a company.
A potentially explosive market
Intelligent Textiles is a tiny fish in a huge ocean. It operates out of a two-room studio a half-hour outside of London. Three part-timers are employed to do technical, administrative and sales work. The office looks about as low tech as it gets, with sewing machines on the desks and a loom made of wood in the corner. Its handful of customers includes an apparel company, which makes a jacket with Intelligent Textiles’ technology in the sleeve to control an MP3 player. The technology is also used in an easy chair that reclines by squeezing the armrest and insoles that can be inserted into shoes and ski boots to warm feet. The founders sell not just component parts to companies, but also their know-how through consulting contracts to a wide range of industries in geographic markets including Germany, Spain, the UK, and the US. Although sales volumes remain small, the company's potential is large.
Talk of how smart fabric technology will change our lives has been around for some time. Wearers will be able to order milk from the supermarket at the touch of a tie, its boosters have said, or buy bed linen that warms the body as it grows cold at night. Only recently, though, have these futuristic visions become reality – with Intelligent Textiles playing a key role. The story of Intelligent Textiles provides a window into how a tiny company – armed with only a first-mover advantage and valuable IP – can position itself to be a chief player in a potentially explosive market.
The gamble paid off
For two entrepreneurs from academia, they showed considerable foresight when it came to IP issues. At the time, Dr Swallow, a design engineer, was working as a lecturer at Brunel University, while Ms Thompson, a weaver by training, was a research fellow at the university, designing educational toys for disabled children. The two viewed IP as crucial enough to do much of the patent filing work themselves. Even though the university supplied a patent attorney, they spent some six months drafting the 30-page patent application, including a solid month dedicated fulltime to the effort. They did their own novelty search for conflicting patents and asked two professional providers to search too. They sought further advice from two outside patent attorneys to be sure they were getting the best advice from the university’s expert.
Next, they decided to secure those IP rights for themselves. Originally, the university owned the patent. In 2000, Dr Swallow and Ms Thompson took a gamble and bought it back for tens of thousands of dollars, emptying their savings accounts and borrowing from family and friends, to buy the patent and support their first months in business.“ It could have all gone horribly wrong,” admits Dr Swallow.
It was not an easy decision to make either. The university could provide further research and development, but they worried that the technology’s potential might prove too big for the institution to handle. What they really needed was to commercialise the product, quickly.“ That is notoriously difficult to do from inside a university,” says Dr Swallow.
Early on they received affirmation that they had done the right thing. Shortly after establishing the company, they took a road trip, approaching potential customers to seek
advice. A manager in a technology development department at a major toy company told them that they were sure to end up fighting for their IP rights in a court of law.“ It confirmed we were on the right track,” says Ms Thompson.
As a result, they decided to file the patent more broadly. The first filing had been in the UK. They decided to expand the patent’s reach by filing under the PCT and with the EPO.
The filing with the EPO gave them an unexpected advantage during negotiations with their first customer. At a tradeshow, they came across a company called Australian Wool Innovation. The two companies struck up negotiations, which resulted in a contract large enough to fund further research and development, and allowed them to pay back family and friends. “It was stated in no uncertain terms that had our patent only been granted by Australian authorities instead of the European Patent Office, it wouldn’t have been valued nearly as highly,” says Ms Thompson. The company has been operating on cash flow ever since.
Growing sales organically
Surprisingly, the two have shunned the path normally taken by producers of breakthrough technologies. Ordinarily, a company would have raised venture capital by now and expanded rapidly to make sure their technology showed up in every armchair and jacket in the world. Although venture capitalists have offered money, the two have preferred to keep the business small and grow sales organically.
Being small, though, has meant having to outsource what they cannot find the time to do themselves. Although the pair literally cut, sewed and tested the first 10,000 units ever sold, today manufacturing is outsourced to an English firm. Accounting is also outsourced. A patent attorney was among the first of their external recruits. They interviewed six candidates, looking for one who knew multiple industries and would be enthusiastic about their product. In one case, they dismissed a prospect for refusing a request by Ms Thompson for a plastic pen. It had the company’s logo on it and Ms Thompson collects pens. The patent attorney explained that that he would get in trouble if he gave away
company property. They passed on him.“ If he doesn’t give you a pen, he’s not going to give you a quick call back,” says Ms Thompson.“ He’s not going to give you anything unless it’s on the stop-clock. He’s not a giver.” In the end, they opted for the patent attorney originally assigned to them by the university. They say he is enthusiastic about the technology and, because he is from a large firm, sees a wide range of industries and IP filings.
Working around the clock
Today, they own seventeen patents in two families, as well as a few trademarks. Four companies hold options to license Intelligent Textiles’ technology. Not everything is patented and some know-how is kept secret. In total, more than £100,000 has been spent on IP filings and protection, not including the many tens of thousands spent to buy the patent from the university. Annually they spend as much as £40,000 on IP-related issues.
IP work is still largely done in-house in part to save cash, but also because the two are reluctant to part with such a crucial part of their business. Dr Swallow says he still drafts the documents, while the patent attorney checks and files them. Dr Swallow also spends time each month scanning the EPO’s database by keywords, inventor names and company names to check for infringement of his patents, the movements of competitors and for inspiration. As the market grows, policing patent infringement becomes trickier, especially in markets such as China, says Dr Swallow. Indeed, after they filed their first patent, they began to worry about competitors profiting legally or not from their invention.“ As soon as you file, you have a time bomb ticking,” says Ms Thompson.
To date, it has been a first-to-market strategy, its IP, as well as simple good fortune that have kept the company from being swept away by larger or better-funded rivals. Giant Philips Electronics has invested in the research and development of smart fabric technology, but then backed off, say Intelligent Textiles’ founders. One rival, which raised venture capital, expanded very quickly, and is now facing problems and having to restructure. Other niche players have emerged around them, but not as direct competitors that cause worry, they say. The pair, however, are not naive enough to think this situation will last forever.
In the meantime, the pair (a couple who live together) work around the clock. They hope that one day they can each hire an apprentice. Even so, Dr Swallow says he would continue to keep a tight rein on IP.“ Without our patents, we probably wouldn’t have a company,” adds Ms Thompson.
Product facts
The patented technology of Intelligent Textiles makes it possible to weave electrical circuits into fabrics such as cotton, wool and polyester in such a way that the cloth hardly differs from any other. This produces smart fabrics that can, for example, be heated when connected to a battery – e.g. for gloves or bed linen. Also sensors that respond to pressure can be integrated into the fabric, which opens up infinite potential uses, such as making a computer keyboard from a piece of cloth.
Company profile
Staff: 5
Sales 2004: Nominal
Key product: Smart fabric technology.
Customers: Apparel, automotive and healthcare companies.
intelligent textiles limited
ITL Studio
Brunel Science Park
Coopers Hill Lane
Egham
Surrey, TW20 0JZ
UK
www.intelligenttextiles.com
IP background
Patent protection: Seventeen patents in two families.
Patent filing order: UK first, then the PCT and with the EPO.
Department: The founders manage their own IP. An external patent attorney is used.
Budget: Roughly £40,000
Success factors: First-mover advantage.
Challenges: Infringement risk, especially in China.
Contact
European Patent Office
Erhardtstr. 27, 80469 Munich, Germany
Tel.: +49 89 2399 4636
E-mail: sme@epo.org
www.epo.org
The UK Intellectual Property Office
Awareness, Information and Marketing Team
Concept House, Cardiff Road, Newport,
South Wales NP10 8QQ, United Kingdom
Tel.: +44 1633 814768
E-mail: marketing@patent.gov.uk
http://www.ipo.gov.uk/