Chamberlain has three young children and needs to find a new job to support his family. He could try to start a business part-time. There is only one place in the Chicago area that is still focusing on nanotechnology with which he is very familiar: the Argonne Center for Nanomaterials. But when he applied for a position at the center, Argonne’s supervisors assessed his resume from a different angle. Like his previous bosses, they saw sales potential in him.
Washington’s latest creed is to strengthen government and business connections. Chamberlain has learned that federal laboratory supervisors have received a new directive to “relevant research to” the industry. He has entrepreneurial experience and is adventurous. So, he can help Argonne survive in the new political environment, especially where it needs support most.
Chamberlain’s position at Argonne National Laboratory belongs to its Intellectual Property Division, which is responsible for licensing invention patents to companies. His role is to handle the licensing of battery patents that seem to be coming to fruition, but oddly no one cares. Chamberlain accepted the position. But, he told Schroeder, “I couldn’t really do anything. The whole team was mediocre. Even if I was doing nothing, nobody would notice.”
Generally speaking, the traditional role of US national laboratories is to conduct basic research, that is, to advance scientific progress, but this research may or may not have commercial application. However, things are changing. Argonne and the industry began to develop a symbiotic relationship. After the U.S. research labs were split, companies turned to other partner institutions to undertake the original basic research, while the companies themselves concentrated on design, manufacturing, and marketing. Argonne takes a long-term view and adopts the positioning of a traditional private laboratory. However, it has no commercial background, neither pursues economies of scale nor engages in production. It needs to work with companies to push scientific research results to consumers. Now, this mutual need is further met in a new political environment: laboratories focus on inventions, and corporations manufacture and sell.
Chamberlain has an intuitive understanding of this symbiotic relationship. Schroeder noted that he had started to mention talks with some businesses. Schroeder asked, “Dude, do you remember what you said when you first took office that you didn’t plan to do anything?”
Chamberlain replied, “Yes, I tried my best. But I think I’m getting better.”
For a year, Chamberlain became familiar with the battery division’s patents. He had seen a 30-page overview of patent portfolios that Ralph Broad had drafted for the lab. Broad, 80, may be the nation’s best-known personal adviser on lithium-ion batteries. In the paper, Broad specifically points out that Argonne’s MNC formulation is an attractive property. Meanwhile, the invention really caught Chamberlain’s attention. At various industry conferences, he kept hearing representatives of major Asian companies boasting how they were meeting consumers’ desire for durability and safety with an ingenious and improved version of the NMC. Chamberlain felt he was “opening the treasure box and looking for gold”. However, he hadn’t heard of any company knowing about Argonne’s chemistry patents.
The lab’s problem is the lack of international patents for this NMC invention. Patent filing fees can be well over $100,000 to obtain foreign ownership of a patent, especially in China, Japan or South Korea. Due to the intense competition in these countries, patent protection is necessary. Much of this fee is legal, as patent applications are bound to be challenged in the first round of debate. The patent team did not agree to apply for international protection for every patent, which would be too costly. Therefore, in order to save the patent application fee, the Intellectual Property Department only applied for a US patent for this NMC invention.
The simple reason for this blunder is that the patent team has not yet fully adapted to the impending craze for batteries in the international market – patent lawyers simply do not know, and may not understand, the future size of the market and the unique place this NMC invention has in it. For the same reason, Thackeray himself did not urge his colleagues to apply for international patent protection for the invention.
Thackeray regretted that. You can feel the frustration of the battery team. In their view, the only way to avoid mistakes due to shortsightedness is to apply for patents all over the world for all scientific research results. Today, this stuff is in the hands of many Asian companies that either buy a competing cathode from 3M, which holds the international patent, or, in most cases, take advantage of the NMC invention for free. Like Goodenough’s two great inventions, Argonne’s NMC invention made no money.
Chamberlain is determined to recapture some of the lost gains. The idea is not simple to implement, since no company would easily buy the right to use a patent that is currently free to use. But these types of companies shamelessly use Argonne’s NMC inventions without anyone’s authorization, and they’re exactly what he’s targeting. Of course, Chamberlain could take an appeal to honor, trying to persuade one or more Asian companies to buy Argonne’s patent licenses in fairness. If this approach is successful, it could attract the attention of other companies, who may also buy licenses to avoid lawsuits. However, he is still skeptical about the effectiveness of this strategy – in his opinion, the business environment in Asia is the most ruthless in the world, so what business practices are fair in Asia?
That’s when Chamberlain’s industry experience comes in handy: he decides to artificially create the shortage market invented by Argonne NMC. His idea was to sell the global manufacturing licenses for two NMCs, and only two worldwide. If any business outside the U.S. wants to use Argonne’s NMC in their product, they must purchase the rights from these two lucky businesses. The two companies will purchase the aforementioned global manufacturing licenses from Argonne for a negotiated price and then share the proceeds of the rights to manufacture the material in countries outside the United States. After the sale of the two global manufacturing licenses, Argonne will no longer sell such licenses. He hopes that such a move will quickly spark enthusiasm for the technology. Since Argonne itself has no international use rights, this strategy is easy to mislead others and seems a bit “evil”. Still, Chamberlain thought, it could still work. Any business could risk unauthorized use of Argonne’s NMC invention to manufacture battery products. But if they do, they’re taking a big risk — one or both of the companies holding the aforementioned global manufacturing licenses could sue them.
Chamberlain has this idea, it can be described as courageous. What if the market completely turned a blind eye to him?
Chamberlain could take advantage of Thackeray and Oman’s prestige in the industry. Over the years, executives at almost every major manufacturer in the world have dealt with either or both of these battery stars. The two introduced Chamberlain to the corporate world, and Chamberlain launched a global business survey program. In the end, two companies, the German chemical giant BASF and the Japanese chemical manufacturer Tian Kogyo, extended their olive branches. In 2008, Chamberlain signed licensing agreements with these two companies at two ceremonies respectively, and the agreement amount (cash) set a new record for Argonne. Now that Argonne NMC has a global market price, the labs are starting to make money from this portfolio of inventions that they hadn’t thought of before.
If a company needs Argonne NMC and is against risk taking, then it has to buy the right to use it. The new conditions had a major impact on this NMC’s charm: Chamberlain’s phone started ringing incessantly. The companies calling him declined the NMC he “sold”. They thought he was bluffing. “How much did you say a license was?” they asked at the time, but he wasn’t bluffing — Argonne had sold NMC’s two exclusive worldwide manufacturing licenses. It doesn’t sell any more NMC licenses. Now it is time for them to worry. Chamberlain’s artificial shortage has become a reality.
As for domestically, no company infringes on Argonne’s NMC patents for the simple reason that there is almost no lithium-ion industry in the United States. Almost all lithium-ion batteries sold in the US are made in Asia. However, Chamberlain is not worried about infringing companies in the United States. He hopes that Argonne’s NMC can be used in China. He hopes that Argonne’s attention in China will continue to increase, and if any company decides to put some NMC in a product, like a new electric vehicle being developed by a Detroit-based automaker, he’s more than happy to grant them patent licenses. No U.S. company would publicly infringe such a clear government-funded patent
So he started lobbying for American companies in the battery race. He persuaded them to switch to Argonne’s NMC. Both Johnson Controls and Procter & Gamble have said they are willing in principle to make batteries with this NMC. However, they must plan for the long term. It would take them 5 years to configure a new factory for another battery. 5 years is too long for Chamberlain. He wants Argonne’s technology to make its way into American-made devices soon.
At this point, he remembered the electrolyte technology developed by Cajal Aman. Additives developed in Oman do not require modifications to existing machinery. He found Johnson Controls and Procter & Gamble. Both companies agree that changing the electrolyte is very simple. And just like that, Chamberlain got its first American customers.
Chamberlain also noticed other changes. For the first time, he received eager calls from other American companies. They had heard of Argonne’s NMC and electrolyte additions. What other “treasures” did Chamberlain hide? “We’re starting to receive visitors,” he said. Company executives want to visit Argonne in person. The influence of the laboratory in the industry is growing.
Chamberlain is preparing to draft a template agreement for patent licensing to cover Argonne’s entire battery patent portfolio.
Companies in the industry are faced with a choice: they can pay an upfront payment under a ten-year licensing agreement to purchase the patent rights to Oman-developed Additives, NMCs or any other invention, and then pay periodic royalties;
Alternatively, they can pay a closing fee equal to the amount sold. In Chamberlain’s view, Argonne is taking a step-by-step approach to realizing the grand blueprint. “Portfolio management is one of the components of economic warfare,” he said.