    [Senate Hearing 107-1129]
    [From the U.S. Government Publishing Office]

                                                           S. Hrg. 107-1129

                                 NANOTECHNOLOGY

    =======================================================================

                                    HEARING

                                   before the

                 SUBCOMMITTEE ON SCIENCE, TECHNOLOGY, AND SPACE

                                     OF THE

                             COMMITTEE ON COMMERCE,
                          SCIENCE, AND TRANSPORTATION
                              UNITED STATES SENATE

                          ONE HUNDRED SEVENTH CONGRESS

                                 SECOND SESSION

                                   __________

                               SEPTEMBER 17, 2002

                                   __________

        Printed for the use of the Committee on Commerce, Science, and
                                 Transportation

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           SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                          ONE HUNDRED SEVENTH CONGRESS

                                 SECOND SESSION

                  ERNEST F. HOLLINGS, South Carolina, Chairman
    DANIEL K. INOUYE, Hawaii             JOHN McCAIN, Arizona
    JOHN D. ROCKEFELLER IV, West         TED STEVENS, Alaska
        Virginia                         CONRAD BURNS, Montana
    JOHN F. KERRY, Massachusetts         TRENT LOTT, Mississippi
    JOHN B. BREAUX, Louisiana            KAY BAILEY HUTCHISON, Texas
    BYRON L. DORGAN, North Dakota        OLYMPIA J. SNOWE, Maine
    RON WYDEN, Oregon                    SAM BROWNBACK, Kansas
    MAX CLELAND, Georgia                 GORDON SMITH, Oregon
    BARBARA BOXER, California            PETER G. FITZGERALD, Illinois
    JOHN EDWARDS, North Carolina         JOHN ENSIGN, Nevada
    JEAN CARNAHAN, Missouri              GEORGE ALLEN, Virginia
    BILL NELSON, Florida
                   Kevin D. Kayes, Democratic Staff Director
                      Moses Boyd, Democratic Chief Counsel
          Jeanne Bumpus, Republican Staff Director and General Counsel
                                     ------

                 Subcommittee on Science, Technology, and Space

                          RON WYDEN, Oregon, Chairman
    JOHN D. ROCKEFELLER IV, West         GEORGE ALLEN, Virginia
        Virginia                         TED STEVENS, Alaska
    JOHN F. KERRY, Massachusetts         CONRAD BURNS, Montana
    BYRON L. DORGAN, North Dakota        TRENT LOTT, Mississippi
    MAX CLELAND, Georgia                 KAY BAILEY HUTCHISON, Texas
    JOHN EDWARDS, North Carolina         SAM BROWNBACK, Kansas
    JEAN CARNAHAN, Missouri              PETER G. FITZGERALD, Illinois
    BILL NELSON, Florida

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held September 17, 2002..................................     1
    Statement of Senator Allen.......................................     5
    Statement of Senator Wyden.......................................     1
        Prepared statement...........................................     3

                                   Witnesses

    Modzelewski, F. Mark, Executive Director, NanoBusiness Alliance..    11
        Prepared statement...........................................    13
    Russell, Hon. Richard M., Associate Director for Technology,
      Office of Science and Technology Policy........................     7
        Prepared statement...........................................     9
    Stupp, Samuel I., Ph.D., Chairman of the Committee for the Review
      of the National Nanotechnology Initiative, National Research
      Council/The National Academies, and Board of Trustees Professor
      of Materials Science, Chemistry and Medicine, Northwestern
      University.....................................................    24
        Prepared statement and summary...............................    26
    Swami, Nathan, Director, Initiative for Nanotechnology,
      Commonweawlth of Virginia, and Microelectronics Program
      Director, University of Virginia...............................    36
        Prepared statement...........................................    38
    Williams, R. Stanley, HP Fellow and Director, Quantum Science
      Research, Hewlett-Packard......................................    30
        Prepared statement...........................................    32

                                    Appendix

    Lieberman, Hon. Joseph I., U.S. Senator from Connecticut,
      prepared statement.............................................    57
    Roman, Dr. Cristina, Executive Director, European NanoBusiness
      Association, prepared statement................................    74
    Response to Written Questions Submitted by Hon. Ron Wyden to:
        F. Mark Modzelewski..........................................    61
        Hon. Richard Russell.........................................    58
        Dr. Samuel I. Stupp..........................................    68
        R. Stanley Williams..........................................    71

                                 NANOTECHNOLOGY

                                  ----------

                          TUESDAY, SEPTEMBER 17, 2002

                                   U.S. Senate,
        Subcommittee on Science, Technology, and Space,
            Committee on Commerce, Science, and Transportation,
                                                        Washington, DC.
        The Subcommittee met, pursuant to notice, at 2:35 p.m. in
    room SR-253, Russell Senate Office Building, Hon. Ron Wyden,
    Chairman of the Subcommittee, presiding.

                 OPENING STATEMENT OF HON. RON WYDEN,
                        U.S. SENATOR FROM OREGON

        Senator Wyden. Today, the Subcommittee on Science,
    Technology, and Space convenes the first ever Senate hearing on
    nanotechnology. Certainly in coffee shops and senior centers
    this afternoon Americans are not exactly buzzing about this
    science of building electronic circuits and devices from single
    atoms and molecules, but there is no question that this field
    will dramatically change the way the American people live.
        Today, I have introduced legislation on this issue with my
    distinguished colleague, the Senator from Virginia, and others.
    He and I have been pursuing all of these important technology
    issues on a bipartisan basis throughout the session, and I want
    to thank him for his support and also note that Senator
    Lieberman, Senator Landrieu and Senator Clinton are original
    sponsors of our bipartisan legislation as well.
        My own judgment is that the nanotechnology revolution has
    the potential to change America on a scale that is equal to if
    not greater than, the computer revolution. As chair of this
    Subcommittee, I am determined the United States will not miss
    the opportunities in this exciting field. At present, efforts
    in the nanotechnology area are strewn across a half-dozen
    Federal agencies. I believe it is critical that the Government
    marshall its various nanotechnology efforts in one driving
    force to become the Nation's leader in this burgeoning field,
    and I am of the view that Federal support is essential to
    achieving the goal.
        The legislation that we have introduced today will provide
    a smart, accelerated, and organized approach to nanotechnology
    research, development, and education. In my view, there are
    three major steps that need to be taken. First, a national
    nanotechnology research program should be established to
    superintend long-term, fundamental nanoscience and engineering
    research. The program's goals are to ensure America's
    leadership and economic competitiveness in nanotechnology, and
    to make sure that the ethical and social concerns are taken
    into account, alongside the development of the discipline.
        Second, the Federal Government should support nanoscience
    through a program of research grants and also through the
    establishment of nanotechnology research centers. These centers
    would serve as key components of a national research
    infrastructure, bringing together experts from the various
    disciplines that must intersect for nanoscale projects to
    succeed. As these research efforts take shape, educational
    opportunities will be key to their success.
        In this hearing room, I have already laid out a challenge
    to triple the number of people graduating with math, science,
    and technology degrees. Today, I commit to helping students who
    would enter the field of nanotechnology. This discipline
    requires multiple areas of expertise. Students with the drive
    and the talent to pursue physics, chemistry, and materials
    science, simultaneously, deserve all the support that we can
    offer.
        Third, the Government should create connections across
    agencies to mesh the various ongoing nanotechnology efforts.
    These should include a national steering office, a Presidential
    Nanotechnology Advisory Committee modeled on the President's
    Information Technology Advisory Committee. I also believe that
    as these organizational support structures are put in place,
    rigorous evaluation must take place to ensure the maximum
    efficiency of our efforts. Personally, I would call for an
    annual review of America's nanotechnology efforts from the
    presidential advisory committee and a periodic review from the
    National Academy of Sciences.
        In addition to monitoring our own progress, the Government
    should keep abreast of the world's nanotechnology efforts
    through benchmarking studies. If the Federal Government fails
    to get behind nanotechnology today with organized goal-centered
    support, the country runs the risk of falling behind other
    nations. Nanotechnology is already making pants more stain-
    resistant, more windows self-washing, and making car parts
    stronger with tiny particles of clay.
        America risks missing the next generation of
    nanotechnology. In the next wave, nanoparticles and nanodevices
    will be the building blocks of health care, agriculture,
    manufacturing, environmental cleanup, and even national
    security. America does risk missing a revolution in electronics
    where a device the size of a sugar cube could hold all of the
    information in the Library of Congress. Today's silicon-based
    technologies can only shrink so small. Eventually,
    nanotechnology will grow devices from the molecular level up.
    Small though they may be, their capabilities and their impacts
    are going to be enormous. Spacecraft could be the size of mere
    molecules.
        America risks missing a revolution in health care. In my
    home State, Oregon State University researchers are working at
    the microscale to create lapel pin-sized biosensors that use
    the color-changing cells of the Siamese fighting fish to
    provide instant visual warnings when a biotoxin is present. An
    antimicrobial dressing for battlefield wounds is already
    available today, containing silver and nanocrystals that
    prevent infection and reduce inflammation.
        The health care possibilities are limitless. Eventually,
    nanoscale particles will travel through human bodies to detect
    internal disease. Chemotherapy could attack individual cancer
    cells and leave healthy cells intact. Tiny bulldozers could
    unclog blocked arteries. Human disease would be fought cell by
    cell, molecule by molecule, and nanotechnologies would provide
    victories over disease that cannot be imagined today.
        So America does risk missing a host of beneficial
    breakthroughs. America's scientists could be the first to
    create nanomaterials for manufacturing and design that are
    stronger, lighter, harder, self-repairing, and safer. Nanoscale
    devices could scrub automobile pollution out of the air as it
    is produced. Nanoparticles could cover armor to make America's
    soldiers almost invisible to enemies, and incredibly enough,
    tend to their wounds. Nanotechnology could grow steel stronger
    than what is made today with little or no waste to pollute the
    environment.
        And especially, there is an extraordinary opportunity to
    promote more jobs and an economic revolution. With much of
    nanotechnology now existing in a research surrounding, venture
    capitalists are already investing $1 billion in American
    nanotech interests this year alone. It is estimated that
    nanotechnology will become a trillion dollar industry over the
    next 10 years. As the field grows, the ranks of skilled workers
    needed to discover and apply its capabilities have to grow as
    well. In the nanotechnology revolution, areas of high
    unemployment could become magnets for domestic production,
    engineering, and research for nanotechnology applications, but
    only if the Government does not miss the boat.
        The National Nanotechnology Initiative is clearly a step in
    the right direction. Significant funds have already been
    committed to nanotechnology research and development, and what
    we need to make clear is that funding is not enough. There has
    to be careful planning to make sure that the money is used for
    sound science over the long term. That is the reason for the
    bipartisan legislation that Senator Allen and I have teamed up
    on today.
        I am going to put the rest of this statement that I have,
    and a lengthy one it is, into the record, and recognize my
    colleague. As I say, it has been a pleasure to team up with
    Senator Allen on a host of these technology questions. This is
    one that I think is going to be particularly exciting in States
    like Virginia and Oregon, where there are already pioneering
    efforts underway, and I want to again express my appreciation
    to my colleague.
        [The prepared statement of Senator Wyden follows:]

         Prepared Statement of Hon. Ron Wyden, U.S. Senator from Oregon

        Today the Subcommittee on Science, Technology and Space convenes
    the first-ever Senate hearing on nanotechnology. In coffee shops and
    senior centers this afternoon, Americans aren't exactly buzzing about
    this science of building electronic circuits and devices from single
    atoms and molecules. But there's no question that this field will
    dramatically change the way Americans live.
        My own judgment is the nanotechnology revolution has the potential
    to change America on a scale equal to, if not greater than, the
    computer revolution. As Chair of this Subcomittee, I am determined that
    the United States will not miss, but will mine the opportunities of
    nanotechnology. At present, efforts in the nanotechnology field are
    strewn across a half-dozen Federal agencies. I want America to marshal
    its various nanotechnology efforts into one driving force to remain the
    world's leader in this burgeoning field. And I believe Federal support
    is essential to achieving that goal.
        Legislation I am introducing today will provide a smart,
    accelerated, and organized approach to nanotechnology research,
    development, and education. In my view, there are three major steps
    America must take to ensure the highest success for its nanotechnology
    efforts.
        First, a National Nanotechnology Research Program should be
    established to superintend long-term fundamental nanoscience and
    engineering research. The program's goals will be to ensure America's
    leadership and economic competitiveness in nanotechnology, and to make
    sure ethical and social concerns are taken into account alongside the
    development of this discipline.
        Second, the Federal government should support nanoscience through a
    program of research grants, and also through the establishment of
    nanotechnology research centers. These centers would serve as key
    components of a national research infrastructure, bringing together
    experts from the various disciplines that must intersect for nanoscale
    projects to succeed. As these research efforts take shape, educational
    opportunities will be the key to their long-term success.
        In this hearing room, I have already laid out a challenge to triple
    the number of people graduating with math, science and technology
    degrees. Today, I commit to helping students who would enter the field
    of nanotechnology. This discipline requires multiple areas of
    expertise. Students with the drive and the talent to tackle physics,
    chemistry, and the material sciences simultaneously deserve all the
    support we can offer.
        Third, the government should create connections across its agencies
    to aid in the meshing of various nanotechnology efforts. These could
    include a national steering office, and a Presidential Nanotechnology
    Advisory Committee, modeled on the President's Information Technology
    Advisory Committee.
        I also believe that as these organizational support structures are
    put into place, rigorous evaluation must take place to ensure the
    maximum efficiency of our efforts. Personally, I would call for an
    annual review of America's nanotechnology efforts from the Presidential
    Advisory Committee, and a periodic review from the National Academy of
    Sciences. In addition to monitoring our own progress, the U.S. should
    keep abreast of the world's nanotechnology efforts through a series of
    benchmarking studies.
        If the Federal government fails to get behind nanotechnology now
    with organized, goal-oriented support, this nation runs the risk of
    falling behind others in the world who recognize the potential of this
    discipline. Nanotechnology is already making pants more stain-
    resistant, making windows self-washing and making car parts stronger
    with tiny particles of clay. What America risks missing is the next
    generation of nanotechnology. In the next wave, nanoparticles and
    nanodevices will become the building blocks of our health care,
    agriculture, manufacturing, environmental cleanup, and even national
    security.
        America risks missing a revolution in electronics, where a device
    the size of a sugar cube could hold all of the information in the
    Library of Congress. Today's silicon-based technologies can only shrink
    so small. Eventually, nanotechnologies will grow devices from the
    molecular level up. Small though they may be, their capabilities and
    their impact will be enormous. Spacecraft could be the size of mere
    molecules.
        America risks missing a revolution in health care. In my home
    state, Oregon State University researchers are working on the
    microscale to create lapel-pin-sized biosensors that use the color-
    changing cells of the Siamese fighting fish to provide instant visual
    warnings when a biotoxin is present. An antimicrobial dressing for
    battlefield wounds is already available today, containing silver
    nanocrystals that prevent infection and reduce inflammation. The health
    care possibilities for nanotechnology are limitless. Eventually,
    nanoscale particles will travel through human bodies to detect and cure
    disease. Chemotherapy could attack individual cancer cells and leave
    healthy cells intact. Tiny bulldozers could unclog blocked arteries.
    Human disease will be fought cell by cell, molecule by molecule--and
    nanotechnology will provide victories over disease that we can't even
    conceive today.
        America risks missing a host of beneficial breakthroughs. American
    scientists could be the first to create nanomaterials for manufacturing
    and design that are stronger, lighter, harder, self-repairing, and
    safer. Nanoscale devices could scrub automobile pollution out of the
    air as it is produced. Nanoparticles could cover armor to makes
    American soldiers almost invisible to enemies and even tend their
    wounds. Nanotechnology could grow steel stronger than what's made
    today, with little or no waste to pollute the environment.
        Moreover--and this is key--America risks missing an economic
    revolution based on nanotechnology. With much of nanotechnology
    existing in a research milieu, venture capitalists are already
    investing $1 billion in American nanotech interests this year alone.
    It's estimated that nanotechnology will become a trillion-dollar
    industry over the next ten years. As nanotechnology grows, the ranks of
    skilled workers needed to discover and apply its capabilities must grow
    too. In the nanotechnology revolution, areas of high unemployment could
    become magnets for domestic production, engineering and research for
    nanotechnology applications--but only if government doesn't miss the
    boat.
        Our country's National Nanotechnology Initiative is a step in the
    right direction. This nation has already committed substantial funds to
    nanotechnology research and development in the coming years. But
    funding is not enough. There must be careful planning to make sure that
    money is used for sound science over the long-term. That is the reason
    for the legislation I am issuing today. The strategic planning it
    prescribes will ensure that scientists get the support they need to
    realize nanotechnology's greatest potential.
        In 1944 the visionary President Franklin Delano Roosevelt requested
    a leading American scientist's opinion on advancing the United States'
    scientific efforts to benefit the world. Dr. Vannevar Bush offered his
    reply to President Harry S. Truman the next year, following FDR's
    death. In his report to the President, Dr. Bush wrote, ``The Government
    should accept new responsibilities for promoting the flow of new
    scientific knowledge and the development of scientific talent in our
    youth. These responsibilities are the proper concern of the Government,
    for they vitally affect our health, our jobs, and our national
    security. It is in keeping also with basic United States policy that
    the Government should foster the opening of new frontiers and this is
    the modern way to do it.''
        Those principles, so true nearly sixty years ago, are truer still
    today. I propose that the government now accept new responsibilities in
    promoting and developing nanotechnology. Our witnesses today will make
    it clear that nanotechnology will vitally affect our health, our jobs,
    and our national security--as well as our economy. I look forward to
    hearing from them on how this Congress might take up what I believe is
    a proper concern--and an essential one--indeed.

                    STATEMENT OF HON. GEORGE ALLEN,
                       U.S. SENATOR FROM VIRGINIA

        Senator Allen. Thank you, Mr. Chairman, and I want to thank
    you for calling today's hearing. I want to share your
    enthusiasm about today's prospect as well as many other
    matters. We worked as leaders in a bipartisan manner to try to
    get our colleagues in the Senate and, indeed, the whole Federal
    Government to address many important needs of our country,
    especially in the areas of science and space and technology. I
    look forward to listening to our panel of experts. I know that
    one, Dr. Swami, is from Virginia, and there is a great deal of
    promise here. I think it is exciting, because it is not just a
    matter of jobs, which is great, but it is truly improving our
    lives, our communications, our material sciences, and many
    other areas.
        We had a hearing in this Committee earlier about the
    importance of basic scientific research and whether or not
    Congress should consider doubling the budget for the National
    Science Foundation, and in the midst of that hearing, one of
    the more intriguing conversations was the discussion on
    nanotechnology, and those witnesses were saying, pay attention
    to that and, of course, you and I were, and in fact in
    preparing for this I looked back to a speech I gave in April of
    last year, and my view is, nanotechnology is quickly
    transforming every corner of our modern world and has already--
    as you gave some of the examples, already transforming and
    improving the quality of our life.
        Whether it is electronic devices in computers to health
    care, pharmaceuticals, agriculture, energy, or national
    defense, nanoscience is really at the foundation and will be at
    the foundation of many of these revolutionary advances and
    discoveries in the decades to come. Some will be years to come,
    some decades to come, but it is certainly going to occupy a
    major portion of our technology economy. It is that promise, it
    is that potential that should impel us as Americans, in a land
    that has always historically valued and encouraged innovation
    and entrepreneurship, that we embrace and support this research
    and this work.
        Our Nation has been at the forefront of virtually every
    important and transformative technology since the Industrial
    Revolution, and we must continue to lead the world in the new
    frontier of nanoscience, and that is why, Mr. Chairman, I am so
    proud and enthusiastically joining with you in supporting and
    introducing the 21st Century Nanotechnology Research and
    Development Act. I think it is vitally important for the future
    of our country, for our competitive edge.
        Maybe some people will wonder what in the world is
    nanotechnology. We will get a definition of nanotechnology. It
    is typically defined by size, and the science of nanotechnology
    is really the ability to pick and place and manipulate atoms
    one one-hundred thousandth times smaller than the width of a
    human hair. So pull one of these out of your head.
        Senator Wyden. I do not have any left. I have given them to
    this cause.
        [Laughter.]
        Senator Allen. What a personal commitment.
        [Laughter.]
        Senator Allen. They are one one-hundredth times smaller
    than the width of a human hair. Of course, you would have to
    look at that under a microscope. You probably could not see it
    with the naked eye, but this is going to generate these
    materials and the fundamentally new and superior methods of
    science for us, and to improve our lives, so I agree with
    everything you said, Mr. Chairman, and I look forward to
    working with you and this Committee in making sure that the
    United States leads in this, as well as other areas. If we are
    going to lead, we have to be well-coordinated. We need a game
    plan.
        We do not just--obviously there is more funding in our act,
    and it is consistent with President Bush's initiatives as well,
    but we do want to have measurement, also recognizing in this
    that many of these developments and improvements in the
    marketing of these advancements may be decades down the road,
    but this is what I think the taxpayers of the United States
    Government would like us to do. And we look forward to
    listening to this esteemed panel as to how we can make sure
    that the Federal Government, working with the private sector,
    working with colleges and universities and the scientists
    therein, to make sure we have the right fertile ground
    conditions present for the collaboration that is needed for us
    to move forward in this area.
        Again, I thank you for this hearing, and thank these fine
    gentlemen for sharing their views with us.
        Senator Wyden. I thank my colleague for an excellent
    statement, we have got a big job ahead of us in terms of
    educating the Senate on these issues, and I look forward to
    tackling them with you.
        So we will introduce our panelists. We will begin with Hon.
    Richard Russell, Associate Director for Technology, Office of
    Science and Technology Policy; and then we will have Mr. Mark
    Modzelewski, executive director of the NanoBusiness Alliance;
    and then Dr. Samuel Stupp, Board of Trustees Professor in
    materials science, chemistry, and engineering at Northwestern;
    Dr. Stan Williams, HP fellow and director of quantum science
    research at Hewlett-Packard; and Dr. Nathan Swami, Director of
    the Initiative for Nanotechnology, Commonwealth of Virginia,
    and the microelectronics program director at the University of
    Virginia.
        Gentlemen, we welcome all of you. We are going to put your
    prepared statements into the record in their entirety, and I
    know that at these hearings there is almost a physical
    compulsion to just read, word for word, everything that is down
    in your statement, and I think in the interest of more having a
    free-flowing discussion, if I can talk you into summarizing
    some of your big concerns so that we can have a discussion
    about some of the issues, we will make your prepared statement
    a part of the hearing record in its entirety. Why don't you
    take, each of you, 5 minutes or so, and we will proceed with
    you.
        Mr. Russell, welcome.

            STATEMENT OF HON. RICHARD M. RUSSELL, ASSOCIATE
            DIRECTOR FOR TECHNOLOGY, OFFICE OF SCIENCE AND
                           TECHNOLOGY POLICY

        Mr. Russell. Thank you, Mr. Chairman and Senator Allen, for
    this opportunity to testify about the National Nanotechnology
    Initiative and the importance of nanotechnology research. I
    agree with you wholeheartedly that this is a tremendously
    important area and a tremendously exciting area for us to be
    looking at. Properties that govern physics of materials and
    artifacts at the nanoscale can differ significantly from those
    at more conventional scales. As a result, nanotechnology
    represents more than simply another step in the progression of
    technology miniaturization.
        Looking to the future, commercialization of nanotechnology
    is expected to lead to new products and in some cases the
    creation of new markets and applications as diverse as
    materials and manufacturing electronics, biotechnology,
    information technology, and national security. New discoveries
    in nanotechnology are being made on a regular basis.
        Just last week, and I am sure we will hear from the other
    panelists, Hewlett-Packard announced a breakthrough in
    molecular electronics through a joint Federal/industry-funded
    project at UCLA. The team pioneered a method to fabricate
    closely spaced nanoscale wires. This novel device represents a
    major breakthrough in memory storage density.
        Another example of great promise is federally funded BioCOM
    chip under development at UC Berkeley. This device allows for
    real-time blood screening for prostate cancer. Though still in
    the prototype stage, this device and others like it promise to
    improve significantly medical diagnostics.
        Nanotechnology is still at a very early stage of
    development. The role of Federal R&D funding in this area is to
    provide the fundamental research underpinnings on which future
    commercial nanoscale technologies could be based. Numerous
    challenges must be addressed before the envisioned promise of
    these technologies can be reached. These challenges include
    fundamental research to improve our understanding in several
    fields of science and engineering as well as synthesis,
    analysis and manufacturing of nanoscale-based products.
        Because of its significant potential impacts on the
    physical sciences, life sciences, and engineering and more
    broadly on the United States' economy and society,
    nanotechnology is viewed by the Bush administration as an
    important component of the Federal research and development
    portfolio. The President requested a 17-percent increase for
    nanotechnology research in fiscal year 2003.
        The administration's ongoing support for nanotechnology was
    also articulated through a joint guidance memorandum issued to
    heads of Federal science and technology agencies from OSTP and
    OMB, which specifically identified nanotechnology as 1 of 6
    interagency R&D priorities for 2004. Federal funding for
    nanotechnology is focused through NNI. NNI is an interagency
    program that encompasses relevant nanotechnology R&D-
    participating Federal agencies.
        The research agenda for the 9 agencies currently
    participating in NNI is coordinated by the Nanoscale Science
    and Engineering Technology Subcommittee, or NSET, which is part
    of the National Science and Technology Council. The National
    Nanotechnology Coordinating Office assists NSET-participating
    agencies in coordinating their nanotechnology funding. It also
    serves as the secretariat for NNI. The coordinating office
    carries out the objectives established by NSET members,
    coordinates and publishes information for workshops sponsored
    by NNI, and prepares annual reports on the activities of NNI.
    The coordinating office also contracts for program reviews to
    provide feedback on NNI.
        NNI funding provides support for a range of activities
    which include basic research, grant challenges, research
    infrastructure and centers, and networks of excellence, which
    are centralized facilities intended to provide sites for
    cooperative research amongst groups of researchers from
    multiple institutions. NNI funding is also used to address
    nontechnical research problems in the broader context,
    including societal implications and workforce and training
    issues that will likely emerge in relation to nanotechnology.
        The National Research Council recently completed a report
    on NNI. The report highlighted the strong leadership of NNI,
    praising the degree of interagency collaboration and the early
    successes of the research programs. The report also provided a
    number of recommendations to further strengthen NNI.
        OSTP is working through the coordinating office and the
    NSTC to improve the structure of NNI, and to create a strong
    framework for implementing NNI's technical objectives. NNI's
    early program success and positive independent review by the
    NRC provides a sound justification for continued support in
    this important research field. With a history of only 2 years,
    the ultimate impact of NNI lies in the future, and will only be
    realized through continued Federal R&D funding.
        Mr. Chairman, Senator Allen, the administration supports
    nanotechnology research, the NNI program, and I look forward to
    working with the Committee on this important research.
        [The prepared statement of Mr. Russell follows:]

     Prepared Statement of Hon. Richard M. Russell, Associate Director for
              Technology, Office of Science and Technology Policy

        Mr. Chairman and Members of the Subcommittee, thank you for the
    opportunity to appear before you today to speak about the National
    Nanotechnology Initiative (NNI).
        Nanotechnology is research and development at the nanoscale--a
    scale on the order of 10-\9\ meters, or a thousandth of a
    millionth of a meter. To provide some perspective, this is
    approximately 1/100,000 the diameter of the average human hair.
    Research in nanotechnology is contributing to a fundamentally new
    understanding of the unique properties that occur on the nanoscale. The
    properties and governing physics of materials and artifacts at the
    nanoscale can differ significantly from those at more conventional
    scales. As a result, nanotechnology represents more than simply another
    step in the progression of technology miniaturization.
        Looking to the future, commercialization of nanotechnology is
    expected to lead to new products, and in some cases the creation of new
    markets, in applications as diverse as materials and manufacturing,
    electronics, medicine and healthcare, environment, energy, chemicals,
    biotechnology, agriculture, information technology, transportation,
    national security, and others. Nanotechnology will likely have a broad
    and fundamental impact on many sectors of the economy. Some have even
    suggested that this impact will surpass the combined impact of both
    biotech and information technology.
        New discoveries are being made on a regular basis. Just last week
    (9/10/02), researchers at Hewlett Packard announced a nanotechnology
    breakthrough in molecular electronics. Through a joint federal/industry
    funded project at the University of California at Los Angeles, the team
    pioneered a method to fabricate nanoscale wires separated by a thousand
    molecules. This novel device represents a major breakthrough in memory
    storage density that heralds a new era in microelectronic
    miniaturization. It serves as a prime example of the promise--and the
    challenge--posed by nanotechnology. This includes the promise of new
    materials, new devices, and new processes that will enable continued
    growth in our high tech industries. But it also highlights the
    challenge of understanding nanoscale phenomena, reliably producing
    nanoscale structures and systems, and converting this new knowledge
    into new technologies that contribute to our economic prosperity.
        Another example of great promise is the federally funded BioCOM
    chip under development at the University of California at Berkeley.
    This device combines elements of both the nano- and the micro-scale
    into a lab-on-a-chip package that provides a new tool for real-time
    sampling of blood for Prostate Specific Antigen (PSA) screening. Though
    still in the prototype stage, this device, and others like it, promise
    to revolutionize medicine. These developments are leading to new
    sensors that will be utilized in medicine as well as homeland security,
    broadly contributing to healthcare, economic strength, and national
    security.
        Nanotechnology is still at a very early stage of development. The
    role of federal R&D funding in this area is to provide the fundamental
    research underpinnings upon which future commercial nanoscale
    technologies will be based. Numerous challenges must be addressed
    before the envisioned promise of these technologies can be reached.
    These challenges include fundamental research to improve our basic
    understanding in several fields of science and engineering, as well as
    novel approaches toward synthesis, analysis and manufacturing of
    nanotechnology-based products. Because of the complexity, cost, and
    high risk associated with these issues, the private sector is often
    unable to assure itself of short-to-medium term returns on R&D
    investments. Consequently, industry is not likely to undertake the
    basic research investments necessary to overcome the technical barriers
    that currently face the nanotechnology field. The NNI program is
    structured to overcome these barriers so that America's industries will
    prosper from our investment in nanotechnology.
        The President's FY 2003 budget represents a record request for
    federally funded R&D ($112 billion), an increase of eight percent over
    the previous investment. Because of its significant potential impact on
    the physical sciences, life sciences, and engineering--and more broadly
    on the U.S. economy and society--nanotechnology is viewed by the Bush
    Administration as an important component of the federal research and
    development (R&D) portfolio. Funding for nanotechnology was increased
    seventeen percent in the FY 2003 request ($679 million). In the
    previous fiscal year, President Bush signed into law a thirty seven
    percent increase in the NNI budget (from $464 million to $579 million).
        The Administration's ongoing support for nanotechnology was
    articulated through a joint guidance memorandum issued to heads of
    Federal science and technology agencies from John H. Marburger III,
    Director of OSTP, and Mitchell Daniels, Director of the Office of
    Management and Budget, which specifically identified nanotechnology as
    one of six interagency R&D priorities for FY 2004.
        Federal funding for nanotechnology is focused through the National
    Nanotechnology Initiative (NNI). The NNI is an interagency program that
    encompasses relevant nanotechnology R&D among the participating Federal
    agencies. The research agenda for the nine agencies currently
    participating in the NNI is coordinated by the Nanoscale Science and
    Engineering Technology (NSET) Subcommittee of the National Science and
    Technology Council (NSTC). The NSET is staffed by representatives of
    the participating agencies, OSTP, OMB, as well as other Federal
    agencies that lack relevant R&D programs but which have an interest in
    these technologies. NSET members meet on a monthly basis to measure
    progress, set priorities, organize workshops, and plan for the coming
    year. The National Nanotechnology Coordination Office (NNCO) assists
    NSET-participating agencies in coordinating their nanotechnology
    funding. It also serves as the secretariat for the NNI. The NNCO
    carries out the objectives established by the NSET members, coordinates
    and publishes information from workshops sponsored by the NNI, and
    prepares annual reports on the activities of the NNI. The NNCO also
    contracts for program reviews to provide feedback on the NNI.
        The federal agencies currently performing nanotechnology research
    coordinated through the NNI are:

       Department of Defense;
       Department of Energy;
       Department of Justice;
       Department of Transportation;
       Environmental Protection Agency;
       National Aeronautics and Space Administration;
       National Institutes of Health;
       National Institute of Standards and Technology; and
       National Science Foundation.

        This funding provides support for a range of activities, which
    include: basic research, focused efforts directed at answering specific
    sets of questions of high significance--so-called ``grand challenges,''
    research infrastructure (instrumentation, equipment, facilities), and
    centers and networks of excellence, which are larger centralized
    facilities intended to provide sites for cooperative and collaborative
    efforts among distributed networks and groups of researchers at
    multiple affiliated institutions. Depending on the agency, funding is
    being used to support mission-oriented research within agencies,
    research at national laboratories, or to support research at academic
    institutions. A small portion of the funding is also dedicated to
    addressing non-technical research problems in a broader context,
    including societal implications, and workforce and training issues that
    will likely emerge in relation to nanotechnology.
        The National Research Council (NRC) conducted an evaluation study
    of the NNI from mid-2001 to mid-2002. Earlier this summer, the NRC
    released the results of this study in a report entitled Small Wonders,
    Endless Frontiers: A Review of the National Nanotechnology Initiative.
    The report highlighted the strong leadership of the NNI, praised the
    degree of interagency collaboration, and lauded the early successes of
    the research programs. The report also provided a number of
    recommendations to further strengthen the NNI. OSTP is working closely
    with the NNCO, as well as through its representation on the NSTC's
    Nanoscale Science and Engineering Technology Subcommittee, to improve
    the structure of the NNI, and to create a stronger framework for
    implementing the NNI's technical objectives. One recommendation of the
    NRC was to create an independent Nanoscience and Nanotechnology
    Advisory Board (NNAB) to provide input to the NSET members. OSTP
    believes that this function can be met through the President's Council
    of Advisors and Science and Technology (PCAST). As you know, PCAST
    members represent a distinguished cross section of industry and
    academia and have always functioned as an external advisory board on
    science and technology issues of relevance to the nation. They are
    clearly qualified to carry out such functions for nanotechnology.
        The NNI was initiated in FY 2001. The early program successes and
    positive independent review by the NRC provide a sound justification
    for continued support in this important research field. With a history
    of only two years, the ultimate impact of the NNI lies in the future
    and will only be realized through continued federal R&D funding.
        Mr. Chairman and Members of the Committee, I hope that this
    overview has conveyed this Administration's commitment to
    nanotechnology and the NNI program. OSTP is actively working with the
    NNCO to implement many of the NRC recommendations. We believe that our
    efforts will improve the program substantially and will enhance our
    investment in nanotechnology.

        Senator Wyden. Thank you. Mr. Modzelewski.

         STATEMENT OF F. MARK MODZELEWSKI, EXECUTIVE DIRECTOR,
                         NanoBusiness ALLIANCE

        Mr. Modzelewski. Mr. Chairman, Senator Allen, I thank you
    for allowing me, on behalf of the NanoBusiness Alliance, the
    member organizations, the opportunity to testify before you on
    the topic of nanotechnology as a transition from a science into
    a business.
        Nanotechnology is rapidly becoming an industrial revolution
    for the 21st Century. However, today's nanotech industry might
    best be compared to the computer industry of the 1960s before
    the integrated circuit, or the biotech industry of the 1970s.
    While many nanotechnology sectors are in the nascent stages,
    others are already delivering products to market. A variety of
    nanomaterials, for instance, including enhanced polymers,
    coatings, and fillers, are already available, producing
    revenues and profits, and advanced nanotechnology medical and
    electronics applications will be imminently impacting our
    lives.
        As production of nanoproducts becomes easier, faster, and
    cheaper, every market sector will begin to feel the impact. We
    at the NanoBusiness Alliance estimate that the global market
    for nanotechnology-related products and services could reach
    more than $225 billion by 2005. The NSF conservatively predicts
    a $1 trillion global market for nanotechnology in a little over
    a decade.
        Since its inception, the National Nanotechnology Initiative
    has proven to be an incredible instance of Government outpacing
    the imagination of the private sector. Mike Roco, Jim Murday,
    and the other individuals who created and continue to advance
    the NNI should be highly commended. That is why the
    NanoBusiness Alliance and its members would like to
    enthusiastically endorse the 21st Century Nanotechnology
    Research & Development Act that is being introduced today by
    the Chairman and Senator Allen. This will be a timely and vital
    bill that builds on the fine work of the NNI and will assist
    America's long-term scientific and economic competitiveness in
    this field.
        Currently, nanotechnology is becoming nanobusiness faster
    than anyone could have ever imagined. Just 5 years ago, only a
    few corporate visionaries, IBM, HP, Texas Instruments among
    them, were undertaking any research and development in the
    nanosciences. Today, you would be hard pressed to find a member
    of the Fortune 500 that does manufacturing without some
    nanotechnology effort underway. GM, GE, Siemens, Intel,
    Hitachi, Dow have all launched significant nanotechnology
    initiatives.
        Unlike the dot com era, nanotech startups are built on
    science, and they are out there. They have real technology and
    real assets, and more often than not they are founded by
    researchers from universities, Government and corporate
    laboratories. More than half of the world's nanotech startups
    are in the U.S., and while it is difficult to pin an exact
    number on how many there are, it is safe to say at least 1,000
    are currently in operation, up from approximately 100 just 3
    years ago.
        Venture capitalists, institutional investors, and wealthy
    angels have also begun to see the potential of nanotechnology.
    Chastened by the lessons of the dot com disaster, they are
    nevertheless aggressively seeking investment opportunities. As
    you mentioned, Mr. Chairman, over $1 billion will be invested
    this year in nanotechnology, when you look at corporate
    venturing efforts, venture capital firms, and other wealthy
    angels.
        Ultimately, regional development efforts, the creation of
    technology clusters, Nanotech Valleys, if you will, will fuel
    the explosive growth of the nanotechnology industry. Localized
    development efforts are already underway from Virginia, to
    Texas, to California. The alliance ourselves launched a
    nanotechnology hubs initiative a few months ago to jump start
    regional technology cluster development, and frankly, we have
    been overwhelmed.
        We launched efforts in 6 regions as well as affiliates in
    the EU and Canada, and have been inundated with calls from over
    35 States and 11 countries to help develop this capacity. These
    States and regions are already looking to nanotechnology to
    ignite economic development.
        As far as foreign competition goes, nanotechnology is truly
    emerging as a global technology, and unlike many past waves of
    technology development the United States is not dominating; in
    several areas of nanotech the U.S. is being outpaced by foreign
    competition. Japan, EU, Russia, Korea, and China are all
    significant players in the field of nanotechnology. A recent
    report from the Journal of Japanese Trade and Industry notes
    the Japanese Government views the successful development of
    nanotechnology as the, quote, ``key to restoration of the
    Japanese economy,'' and they are not alone. Funding is growing
    at unprecedented rates across the globe over the past 3 years.
        Not everything is rosy for the future of nanobusiness.
    While the NNI and overall Government nanotech efforts have been
    a great source of coordination and basic research funding,
    these nanotech grants remain among the most competitive in the
    Government. In addition, many nanotechnology companies have
    emerged from the basic research cycle and are addressing issues
    such as scaling and integration. Few Government programs
    address this time frame. Add to that a venture capital sector
    that is unwilling, too, and you have companies falling into
    what investors term, the Valley of Death.
        Another great fear is uneasiness over lack of research in
    the nanotech health and safety issues, and more than one CEO
    has raised this as a concern. Others range from the U.S. Patent
    Office and its inability to understand the multidisciplinary
    nature of nanotechnology. In addition, the current state of
    technology transfer is lacking, by any measure. The technology
    transfer process from Government, academic labs, and the
    marketplace is impossible at times and arduous at best. And
    lastly the education as well as workforce training and
    development are beginning to become real issues among the
    nanotechnology community.
        In summation, we certainly, as the alliance, greatly
    support this effort to continue to drill down on nanotechnology
    and to develop Government programs for it. While maintaining
    the development of basic research as a priority, we must expand
    our search to cultivate nanotechnology as an industry, and
    truly usher in a new Industrial Revolution.
        I thank you.
        [The prepared statement of Mr. Modzelewski follows:]

        Prepared Statement of F. Mark Modzelewski, Executive Director,
                             NanoBusiness Alliance

    Introduction
        Mr. Chairman, Senator Allen, Members of the Subcommittee, I thank
    you for allowing me--on behalf of the NanoBusiness Alliance and our
    member organizations--the opportunity to testify before you on the
    topic on nanotechnology and its transition from a science into a
    business.
        Nanotechnology has really been here since the dawn of creation. The
    difference now is that man is beginning to tap into it. Nanotechnology
    is the ability to do things--measure, see, predict and manufacture--on
    the scale of atoms and molecules. Traditionally, the nanotechnology
    realm is defined as being between 0.1 and 100 nanometers, a nanometer
    being one thousandth of a micron (micrometer), which is, in turn, one
    thousandth of a millimeter. Working at the scale of atoms and molecules
    is not merely about miniaturizing items. Working at this scale allows
    for the actual opening of nature's toolbox. Working at this scale
    allows man to act as nature does in creating things.
        Currently, nanotechnology is transitioning from a science into a
    business. It is rapidly becoming the Industrial Revolution of the 21st
    century. The importance of nanotechnology cannot be overstated. It will
    affect almost every aspect of our lives, from the way we do computing,
    to the medicines we use, the energy supplies we require, the foods we
    eat, the cars we drive, and the clothes we wear. More importantly, for
    every area where we can fathom an impact from nanotechnology, there
    will be others no one has thought of--new capabilities, new products,
    and new markets.
        We are at the earliest stage of this ``nano-revolution.'' The
    nanotech industry might be compared to the computer industry of the
    1960s, before the development of the integrated circuit, or the biotech
    industry of the 1970s. But while many nanotechnology sectors are in
    their nascent stages, others are already delivering products to the
    market. Forward-thinking corporations and entrepreneurs are reaping
    revenues and profits from a variety of nanomaterials, including
    enhanced polymers, coatings, and fillers. And advanced nanotech medical
    applications, such as disease detection and drug delivery, are in human
    trials and will be greatly impacting lives within a few years.
        As production of nano-products becomes easier, faster and cheaper,
    every market sector will begin to feel their impact. We at the
    NanoBusiness Alliance estimate that the global market for
    nanotechnology-related products and services could reach more than $225
    billion in 2005. The U.S. National Science Foundation conservatively
    predicts a $1 trillion global market for nanotechnology in little over
    a decade.
        (It should be noted that the Microtechnology Innovation Team at
    Deutsche Bank AG. announced last week the results of a comprehensive
    market analysis on nanotechnology (full study available Q3/Q4 2002).
    They estimate that the current market size of nanotechnology products
    is greater than $116 billion, excluding electronics, and $300 billion
    total. According to the report, the nanomaterials market size is
    expected to reach $29.4B per year by 2006. While these significant
    numbers are appreciated, they do not align with other research in the
    field and will need to be explored upon the full release of the
    report.)

    Nanotechnology Development
        Nanotechnology is an enabling technology. It allows us to do new
    things. Like other enabling technologies, such as the internal
    combustion engine, the transistor or the Internet, its impact on
    society will be broad and often unanticipated. And nanotech is indeed
    changing many fields of business in truly revolutionary ways.
    Life Sciences and Medicine
        In life sciences and medicine, nanotechnology means we are
    beginning to be able to measure and make things on the level at which
    organisms in the living world, from bacteria to plants to ourselves, do
    most of their work. Being able to work at this scale doesn't just
    empower us in our control of the biological world, but also allows us
    to start borrowing from that world, leveraging the extraordinary
    inventions that nature has produced through billions of years of
    evolution. Nanotechnology will ultimately help to extend the life span,
    improve its quality, and enhance human physical capabilities. In the
    near future, about half of all production of pharmaceuticals will be
    dependent on nanotechnology--affecting over $180 billion in revenues
    per year in 10 to15 years.

    Disciplines in LifeSciences and Medicine that are seeing
            nanotechnology's impact are:
       Nanoparticle Tagging: Nanoparticles small enough to behave
            as quantum dots can be made to emit light at varying
            frequencies. If you can get particles that emit at different
            frequencies to attach to different molecules you can literally
            put a sign of identification on them. This development will
            allow for the tagging of disease, infection and bacteria,
            allowing for detection at the earliest moment of a disorder's
            onset.

       Nanostructured Materials: Nanostructured materials, coupled
            with liquid crystals and chemical receptors, offer the
            possibility of cheap, portable biodetectors that might, for
            instance, be worn as a badge. Such a badge could change color
            in the presence of a variety of chemicals and would have
            applications in hazardous environments. The U.S. armed forces
            are already in advanced research stage for this discovery to be
            part of the military uniform of the future.

       Drug Delivery: Drug delivery is one of the areas that is
            anticipated to have applications hitting the market very soon;
            clinical trials have already begun. Almost all current
            medications are delivered to the body as a whole, which is fine
            as long as they only become active in the areas you want them
            to. But this is not usually the case. When the treatment is
            designed to kill cells, as in the case of cancer, the side
            effects are enormous. Nanotech also promises to allow for
            substance ``extraction'' potentially removing poisons or toxins
            from the body or allowing for organic coatings of these
            substances so they pass harmlessly through the body.

       Cellular Manipulation: Cells are extraordinarily complex
            systems about which we are still quite ignorant. For this
            reason, it will be a long time before we see nanorobots doing
            complex work in our bodies. However, as we learn more we are
            likely to find ways to manipulate and coerce cellular systems
            and will achieve a lot that way--persuading lost nerve tissue
            to regrow.

    Agriculture
        Nanotechnology will ultimately provide the ultimate solutions for
    many hurdles presented by biotechnology and agri-sciences. The most
    likely area in which nanotechnology will initially enter the
    agricultural industry is the world of analysis and detection, such as
    bio-sensors to detect the quality of and the health of agricultural
    products and livestock. Also, innovative waste treatment options and
    composite materials, as part of the manufacturing and processing of
    agricultural products, are already entering the market.

       Food Safety: Advanced nano-sensors that can detect surface
            and airborne pathogens are already leaving the lab, yet work to
            develop these products for the agriculture sector remain
            limited. Should pricing continue to fall and enhanced
            development be undertaken, the extent of nano-sensor usage can
            go right to the consumer level with the packaging of
            agriculture products such as meat actually examining and
            denoting quality and safety.

       Animal Health: Work on unique drug delivery, protease
            inhibitors, cell tagging and treatment are already hitting the
            trail phases. Targeted drug delivery for instance is one of the
            areas that are anticipated to have applications hitting the
            market very soon. With protease inhibitors, viruses, prions and
            diseases such as BSE (Mad Cow Disease) and Brucellosis.

       GMO Enhancements: Nanoparticles small enough to behave as
            quantum dots can be made to emit light at varying frequencies.
            If you can get particles that emit at different frequencies to
            attach to different molecules you can literally put a sign of
            identification on them. This development will allow for the
            tagging of molecules in the GMO development process. This
            development can also be used to tag disease, infection and
            bacteria, allowing for detection at the earliest moment of a
            disorder's onset. Also the tagging can be a part of the
            treatment as cells that are tagged can be engineered or
            attacked separately from non-tagged cells--allowing for
            pinpoint eradication.

       Nano-filtration: NF uses partially permeable membranes to
            preferentially separate different fluids or ions, and will
            remove particles from approximately 0.0005 to 0.005 microns in
            size. NF membranes are usually used to reject high percentages
            of multivalent ions and divalent cations. while allowing
            monovalent ions to pass. Removal includes sugars, dyes,
            surfactants, minerals, divalent salts, bacteria, proteins,
            particles, dyes, and other constituents that have a molecular
            weight greater than 1000 daltons. Waste treatment efforts are
            already in development.

       BioComposities: Nano-bio composites are in development that
            can serve as composite material for manufacturing that is
            lighter, stronger, yet completely bio-degradable. Uses include
            body panels, parts, organic fibers and many other areas.

    Materials Science
        In materials, things start to behave differently at the nanoscale.
    The bulk materials that we have traditionally dealt with are
    uncontrolled and disordered at small scales. The strongest alloys are
    still made of crystals the size and shape of which we control only
    crudely. By comparison, a tiny, hollow tube of carbon atoms, called a
    carbon nanotube, can be perfectly formed, is remarkably strong, and has
    some interesting and useful electrical and thermal properties.
        When particles get small enough (and qualify as nanoparticles),
    their mechanical properties change, and the way light and other
    electromagnetic radiation is affected by them changes (visible light
    wavelengths are on the order of a few hundred nanometers). Using
    nanoparticles in composite materials can enhance their strength and/or
    reduce weight, increase chemical and heat resistance and change the
    interaction with light and other radiation. While some such composites
    have been made for decades, the ability to make nanoparticles out of a
    wider variety of materials is opening up a world of new composites. For
    example, in 10-15 years, projections indicate that such nanotechnology-
    based lighting advances (utilizing nano-phosphorus among other
    materials) have the potential to reduce worldwide consumption of energy
    by more than 10 percent, reflecting a savings of $100 billion dollars
    per year and a corresponding reduction of 200 million tons of carbon
    emissions.
        It has been estimated that nanostructured materials and processes
    can be expected to have a market impact of over $340 billion within a
    decade (Hitachi Research Institute, 2001). Like so many aspects of
    nanotechnology, this is a difficult thing to estimate because of
    potential new applications--if you can make a material ten times as
    strong and durable as steel for a lesser mass, what new products will
    people dream up?
        The nanometer scale is expected to become a highly efficient length
    scale for manufacturing. Materials with high performance, unique
    properties and functions will be produced that traditional chemistry
    could not create.

    Disciplines in Material Sciences that are seeing nanotechnology's
            impact are:
       Nanoparticulate Fillers: Alternatively, composite materials
            can use nanoparticulate fillers. Composite materials already
            enjoy an enormous market, but making the filling material
            nanophase (i.e. consisting of nanoscale particles) changes its
            properties. As particles get smaller, the material's properties
            change--metals get harder, ceramics get softer, and some
            mixtures, such as alloys, may get harder up to a point, then
            softer again.

       Nanoparticles for Many Applications: Recently, clay
            nanoparticles have made their way into composites in cars and
            packaging materials. (Widespread use of nanocomposites in cars
            could lead to an enormous decrease in fuel consumption: savings
            of over 1.5 billion liters of gasoline over the lifespan of one
            year's vehicle production, thereby reducing carbon dioxide
            emissions by more than 5 billion kilograms). You've probably
            heard of sunscreens using nanoparticulate zinc oxide.
            Nanoparticles are also being used as abrasives, and in paints,
            in new coatings for eyeglasses (making them scratchproof and
            unbreakable), for tiles, and in electrochromic coatings for
            windscreens, or windows. Anti-graffiti coatings for walls have
            been made, as have improved ski waxes and ceramic coatings for
            solar cells to add strength. Glues containing nanoparticles
            have optical properties that give rise to uses in
            optoelectronics. Casings for electronic devices, such as
            computers, containing nanoparticles, offer improved shielding
            against electromagnetic interference. That famous spin-off of
            the space age, Teflon, looks soon to be trumped for
            slipperiness thanks to nanoparticle composites.

       Textiles: Another huge industry that will be impacted by
            nanotechnology is the textiles industry. Companies are working
            on ``smart'' fabrics that can change their physical properties
            according to surrounding conditions, or even monitor vital
            signs. The incorporation of nanoparticles and capsules in
            clothing offers some promise and nanotubes would make extremely
            light and durable materials. Fabrics infused with nanoparticles
            are already being marketed that are highly resistant to water
            and stains and wrinkling.

    Nanoparticle Catalysts
        Many industrial processes will be affected by nanotechnology. One
    major early impact will come from our improved capabilities in making
    nanoparticles, the reason being that nanoparticles make better
    catalysts. A catalyst (a substance that initiates or enhances a
    reaction without being consumed itself) does its work at the point
    where it contacts the reactants, i.e. its surface. Since volume changes
    as the cube of the linear dimension, but surface area changes only as
    the square, when you make a particle smaller in diameter (the linear
    dimension), the volume, and thus mass, decreases faster than the
    surface area. Thus a given mass of catalyst presents more surface area
    if it consists of smaller particles.
        Equally, a given catalytic surface area can be fitted into a
    smaller space. The use of catalysts in industry is widespread so there
    should be a large market here for nanoparticle manufacturers. It should
    be noted, though, that nanostructured catalysts have already been used
    in industry for decades--zeolites, catalytic minerals that occur
    naturally or are synthesized, have a porous structure that is often
    characterized on the nanoscale.
        Catalysts are also of major importance in cleaning up the
    environment, allowing us to break down harmful substances into less
    harmful ones. Improved catalysts will make such processes more
    economical. Petroleum and chemical processing companies are using
    nanostructured catalysts to remove pollutants, creating a $30 billion
    industry in 1999 with the potential of $100 billion per year by 2015.
        Improved catalysts offer a nice example of how taking an existing
    technology and making it better can open up whole new markets.
    Nanostructured catalysts look likely to be a critical component in
    finally making fuel cells a reality, which could transform our power
    generation and distribution industry (for example, our laptops and cell
    phones would run for days on a single charge).

    Disciplines in Catalysts sector that are seeing nanotechnology's impact
            are:
       Fuel Cells: The development of fuel cells will probably be
            impacted by nanotechnology in other ways too, certainly by
            structuring components in them on a nanoscale but also in terms
            of storing the fuel, where the nanotube, yet again, shows
            promise for storing hydrogen for use in fuel cells. A relative
            of the nanotube, the nanohorn, has been touted as ready to hit
            the market in two to four years in a methane-based fuel cell.

       Solar Cells: Nanotechnology has been cited as a way to
            improve the efficiency of solar cells. However, typical
            commercial cells have efficiencies of about 15 percent, with
            over 30 percent having been achieved, which is already much
            better than photosynthesis, at about 1 percent. The cost of
            solar cells is currently the biggest barrier to
            commercialization.

       Light Sources: In the world of light transmission, organic
            LEDs are looking like a promising way of making cheaper and
            longer-lasting light sources, reducing power consumption in the
            process. By contrast, at least one group of researchers has
            created a bulb driven by nanotubes. Tiny electron emitters,
            called field emission devices, including ones based on
            nanotubes, hold promise for use in flat panel displays.

       Pharmaceutical Processes: The pharmaceuticals industry will
            probably experience a benefit not only from advances in
            catalysis, but also from the new, cheaper and smaller
            bioanalysis tools. One estimate claims that nearly half of all
            pharmaceutical production will be dependent on nanotechnology
            within 15 years--a market of some $180 billion per year (E.
            Cooper, Elan/Nanosystems, 2001).

       Waste Treatment: Photocatalysis will play in this field in
            the future. There are efforts underway to sensitize TiO2
            to visible light; this could open the door for this technology
            in large-scale waste treatment, because visible light is free
            and plentiful, especially as compared to UV-light.

    Electronics and Information Technology
        The impact of the Information Technology (IT) Revolution on our
    world has far from run its course and will surely outstrip the impact
    of the Industrial Revolution. Some might claim it has done so already.
    Key to this is decades of increasing computer power in a smaller space
    at a lower cost.
        In electronics, the benefit of working on the nanoscale stems
    largely from being able to make things smaller. The value comes from
    the fact that the semiconductor industry, which we have come to expect
    to provide ever smaller circuits and ever more powerful computers,
    relies on a technology that is fundamentally limited by the wavelength
    of light (or other forms of electromagnetic radiation, such as X-rays).
    The semiconductor industry sees itself plunging towards a fundamental
    size barrier using existing technologies. The ability to work at levels
    below these wavelengths, with nanotubes or other molecular
    configurations, offers us a sledgehammer to break through this barrier.
    Ultimately, circuit elements could consist of single molecules. MEMS
    are generally constructed using the same photolithographic techniques
    as silicon chips and have been made with elements that perform the
    functions of most fundamental macroscale device elements--levers,
    sensors, pumps, rotors, etc. Nanoscale structures such as quantum dots
    also offer a path to making a revolutionary new type of computer, the
    quantum computer, with its promise of mind-boggling computing power, if
    it can be converted from theory to practice. Lasers constitute an area
    that is likely to be commercially affected by nanotechnology in the
    near future. Quantum dots and nanoporous silicon both offer the
    potential of producing tunable lasers--ones where we can choose the
    wavelength of the emitted light.
        You may have heard of Moore's law, which dictates that the number
    of transistors in an integrated circuit doubles every 12 to 24 months.
    This has held true for about 40 years now, but the current lithographic
    technology has physical limits when it comes to making things smaller,
    and the semiconductor industry, which often refers to the collection of
    these as the ``red brick wall'', thinks that the wall will be hit in
    around fifteen years. At that point a new technology will have to take
    over, and nanotechnology offers a variety of potentially viable
    options.

    Disciplines in Electronics and Information Technology that are seeing
            nanotechnology's impact are:
       Carbon Nanotubes in Nanoelectronics: Carbon nanotubes hold
            promise as basic components for nanoelectronics--they can be
            conductors, semiconductors and insulators. IBM recently made
            the most basic logic element, a NOT gate, out of a single
            nanotube, and researchers in Holland are boasting a variety of
            more complex structures out of collections of tubes, including
            memory elements. There are two big hurdles to overcome for
            nanotube-based electronics. One is connectibility--it's one
            thing making a nanotube transistor, it's another to connect
            millions of them together. The other is the ability to ramp up
            to mass production. Traditional lithographic techniques are
            based on very expensive masks that can then be used to print
            vast numbers of circuits, bringing the cost per transistor down
            to one five-hundredth of a U.S. cent. Current approaches to
            nanotube electronics are typically one-component-at-a-time,
            which cannot prove economical. Molecular electronics (which,
            strictly speaking, includes nanotubes) faces similar scaling
            hurdles. There are some possible solutions, however.

       Organic Nanoelectronics: Organic molecules have also been
            shown to have the necessary properties to be used in
            electronics. However, unlike nanotubes, the speed of reaction,
            for instance in switching a memory element, and hardiness in
            face of environmental conditions, will likely limit uses.
            Devices made of molecular components would be much smaller than
            those made by existing silicon technologies. But the issue of
            mass production remains.

       Soft Lithography: There is an approach to making nanoscale
            structures that potentially offers great promise for
            nanoelectronics in the near term, owing to its simplicity. This
            is soft lithography, which is a collection of techniques based
            around soft rubber nanostructured forms or molds. You can use
            these to stamp a pattern on a surface, in the form of
            indentations, or using some form of ``ink''. No special
            technology is required, and nor are the fantastically clean
            environments required for existing silicon chip production.
            Additionally, a wide variety of materials can be used.

            The approach is reminiscent of one of the most famous examples
            of mass-production--the printing press. Soft lithography is
            already used to make microfluidic systems, such as those in
            lab-on-a-chip systems, and it scales readily down to the
            nanoscale (depending on the variant of the technology used,
            resolution can get below 10 nanometers). The techniques also
            promise potential in the creation of optical devices, which may
            in turn ultimately be used in optical computing. As a
            replacement for traditional lithography for creating electronic
            devices, however, there is currently a major obstacle--the
            technique is not well suited to making the precisely-aligned,
            multi-layered structures currently used in microelectronics,
            although researchers are working to overcome this limitation.

       Memory and Storage: When it comes to the technology behind
            the vast IT market, there is much more than just shrinking
            microprocessors to consider. Storing information is vitally
            important and can be done in many ways. Magnetic disks in
            computers have been increasing their capacity in line with
            Moore's law, and have a market at the moment of around $40
            billion. The other type of information storage common to all
            computers is DRAM (dynamic random access memory). DRAM provides
            very quick access but is comparatively expensive per bit.
            Magnetic disks can hold much more information but it takes much
            longer to access the data. Also, DRAM is volatile--the
            information disappears when the power is switched off. The
            trade-offs between access speed, cost, and storage density
            dictate the architecture of computers with respect to
            information storage. New technologies may change this dynamic.

       MRAM: Some memory technologies that are currently being
            researched are single-electron tunneling devices, rapid single
            flux quantum devices, resonant tunneling diodes, and various
            types of magnetic RAM (MRAM). MRAM offers the promise of non-
            volatile RAM, enabling devices such as a PC or mobile phone to
            boot up in little or no time. This puts the technology
            somewhere between existing DRAM and magnetic disk technologies.
            Nanotubes also hold promise for non-volatile memory and recent
            news suggests nanotube-based RAM may hit the market very soon
            (commercial prototype in 1 to 2 years).

       Quantum Computing: In the much longer term, there's quantum
            computing, which offers staggering potential by virtue of the
            ability to perform simultaneous calculations on all the numbers
            that can be represented by an array of quantum bits (qubits).
            The atomic scale, the scale at which quantum effects come into
            play, argues for a requirement for nanoscale structures and
            quantum dots to come up regularly in discussions of quantum
            computing. Primary applications would be in cryptography,
            simulation and modeling. The realization of a quantum computer
            is generally believed to be a long way off, despite some very
            active research. Funding in the area is thus still largely that
            provided for pure research, though some defense department
            money has been made available.

            The total potential for nanotechnology in semiconductors has
            been estimated to be about $300 billion per year within 10
            years, and another $300 billion per year for global integrated
            circuit sales (R. Doering, ``Societal Implications of Scaling
            to Nanoelectronics,'' 2001). But it's actually much harder to
            predict the commercially successful technologies in the world
            of electronics than in the world of materials. The assumption
            that continually increasing processing power will automatically
            slot into a computer hardware market that continues to grow at
            the rate it has done historically, is not necessarily sound.
            Most of the growth over the last decade has been driven by
            personal computers and some argue that this market is nearing
            saturation.

    The National Nanotechnology Initiative
        Since its inception, the National Nanotechnology Initiative (NNI)
    has proven to be an incredible instance of government outpacing the
    vision of the private sector. And already we are the better for it.
        The NanoBusiness Alliance indeed fully endorses the work of the NNI
    and offers our deep appreciation to the fine work of Dr. Mike Roco, Dr.
    James Murday and the other individuals who created the NNI and continue
    to advance its efforts everyday.
        The NNI has been an exceedingly successful program. From our
    industry vantage point the NNI has made an incredible impact in the
    following areas:

       1. Funding: The NNI has provided much needed funding for
            basic research at America's universities and government labs.
            By fueling innovation, this investment is--and will continue
            to--find its way to the public marketplace promoting industry
            development.

       2. Awareness: Before the NNI. the overwhelming majority of
            Americans thought that nanotechnology was science fiction--or
            they never even heard of it. A survey just a couple years back
            showed that less than 5 percent of CEOs knew what
            nanotechnology was, never mind what it meant to their
            businesses. This is changing rapidly. In fact, we now hear
            claims that people talk about nanotechnology too much.

       3. Collaboration: The NNI has been extraordinarily
            successful at fueling collaborations between corporations,
            universities, start-ups and government labs--in the U.S. and
            abroad. Also, the NNI has helped to break down internal
            research silos. Nanotechnology is an incredibly cross-
            disciplinary field. To succeed in developing applications you
            need chemists to work with engineers; and engineers to work
            with physics and so on. Due to the educational efforts of the
            NNI, and the structure of their grants programs, this
            collaborative movement is beginning to ferment. Universities,
            such as University of Washington, are already giving out PhDs
            in NanoScience which trains students across many needed
            disciplines, and other schools are following at the undergrad
            and graduate level.

       4. Competition: For better and for worst, the announcement
            of NNI set forth a global contest for dominance in the
            nanoscience and nanotech industry. Ultimately this will make
            the consumer the winner. This global competition will push even
            more rapid developments.

        That is why the NanoBusiness Alliance and its members would like to
    enthusiastically endorse the 21st Century Nanotechnology Research and
    Development Act that is being introduced by this Senator Wyden.
        By all accounts it will be a vital and timely bill that will assist
    America's scientific and economic competitiveness as well as play a key
    role in developing nanotechnology efforts for Homeland Defense.

    State of NanoBusiness
        Few realize that the age of nanotechnology as a business--
    NanoBusiness--is already here. Though we are admittedly at the earliest
    stages, substantial change is already taking place. Some of the most
    recent predictions for the development of nanotechnology and time to
    market are being rapidly eradicated. For instance, in January 2000 at
    the NNI kick-off announcement at Cal Tech, President Clinton noted:

            ``Just imagine, materials with 10 times the strength of steel
            and only a fraction of the weight; shrinking all the
            information at the Library of Congress into a device the size
            of a sugar cube; detecting cancerous tumors that are only a few
            cells in size. Some of these research goals will take 20 or
            more years to achieve.''

        When President Clinton said those words it seemed like a highly
    reasonable timeframe. Yet here we are a couple of years later and just
    last week Hewlett-Packard said they had created a 64 bit computer
    memory chip using new molecular technology that takes miniaturization
    further than ever before. Some thousands of these memory units could
    fit on the end of a single strand of hair.
        In addition, incredibly strong nanocomposites are already available
    and being used by aircraft manufacturers and automakers among others.
    Researchers at Rice University are in early trials using quantum dots
    to detect cancer in the lab. Have we completely erased the 20 year
    prediction? No, but we are getting close. Very close.

    Corporations
        Just five years ago only a few corporate visionaries--IBM, HP,
    Texas Instruments among them--were undertaking any research and
    development in the nanosciences. Today you'd be hard pressed to find a
    single member of the Fortune 500 that is involved in manufacturing that
    does not have some nanotechnology effort underway--GM, GE, Ford,
    Siemens, Intel, Motorola, Lucent, Toyota, Hitachi, Corning, Dow
    Chemical, NEC, Dupont, 3M, etc. have launched significant nanotech
    initiatives. Some of the biggest spenders on R&D are allocating up to a
    third of their research budgets to nanotech.
        As an example of current market applications in corporate America
    for one small area of nanotech--carbon nanotubes--already some 60
    percent of the cars on our highways utilize nanotubes or other
    nanoparticulate fillers in their fuel lines, airbags, and body panels.
    And 50 percent of lithium batteries on the market utilize nanotubes to
    enhance their energy storage capabilities. These are compelling cases
    of American corporations already tapping into the potential of
    nanobusiness.
        Some examples:

       General Electric: At a time when many corporations are
            scaling back research and development operations, General
            Electric, the world's largest company, reaffirmed its
            commitment to R&D this year with a $100 million+ pledge to
            modernize its global research center. The Center will focus its
            greatest emphasis on nanotechnology. GE views nanotechnology as
            a key component to its future.

       IBM: Few would question that IBM is the world's leading
            nanotechnology company with bleeding edge efforts in nano-
            electronics, life sciences and nano-materials. IBM has major
            nanotechnology operations underway in New York, Zurich and in
            Silicon Valley. They are patenting literally hundreds of new
            nanotechnology discoveries a year.

       Mitsubishi Corp: Mitsubishi Corp. created a joint venture
            with two Arizona-based start-ups, MER and Research Corporation
            Technologies, to form Fullerene International Corp. (FIC). FIC
            has established a fullerene manufacturing facility in Osaka,
            Japan, with MER providing the reactor.

    Start-Ups
        Unlike the Dot-com era, nanotech start-ups are built on science.
    They have real technology. Real assets. And more often than not, they
    are founded by researchers from universities, government and corporate
    laboratories. These young companies are already pushing the growth of
    the field through their innovation. And these start-ups will most
    assuredly be part of the next NASDAQ boom.
        More than half the world nanotech start-ups are in the U.S.. And
    while it is difficult to pin an exact number on how many there are, it
    is safe to say that around a 1,000 are currently in operation up from
    maybe 100 three years ago.
        Some examples:

       C Sixty Inc., A pioneering biotech company that is modifying
            fullerenes for medical applications,--drug delivery, protease
            inhibitors, and disease prevention. C-Sixty has begun clinical
            trials on an AIDS drug already. The Houston-based company also
            reported progress on another fullerene-based approach--this one
            for Lou Gehrig's disease, a degenerative disorder that affects
            nerve cells.

       Luna Innovations: A diverse research company based in
            Blacksburg, Va., recently received a $2 million federal grant
            to develop buckyballs that can be used in magnetic resonance
            imaging (MRI) systems and for possible diagnosis and treatment
            of cancer. They also have a cutting edge sensor in final
            development for the oil and gas industry.

       NanoBio: A start-up company spun off from the University of
            Michigan has created an emulsion that protects civilians and
            troops from biological terror attacks. It actually kills
            anthrax and was approved several years ago, far in advance of
            the horrible events of last fall. This antimicrobial substance
            called NanoProtect, can be applied either before or after an
            attack to all kinds of surfaces, including skin, clothing and
            vehicles. NanoProtect is the result of a five-year, $11.8
            million grant by the U.S. Defense Advanced Projects Research
            Agency (DARPA) to researcher Dr. James Baker Jr.

       Evident Technologies: Evident is a nanotechnology
            manufacturing and application company that draws upon
            semiconductor nanocrystal expertise to develop sophisticated,
            cost effective, innovative devices and products. Their products
            have applicability in biotechnology, optical switching, and
            computing, telecommunications, energy and other fields.
            Evident's quantum dot technology can be used to ``tag''
            cancerous cells, create new lighting source, or serve as part
            of developing electronics. This self funded company has been
            creating profits by supplying testing materials to the
            semiconductor and biotech industries.

    Funding
        Venture capitalists, institutional investors and wealthy angels
    have also begun to see the potential in nanotech, and, though chastened
    by the lessons of the ``dot-com disaster,'' are nevertheless
    aggressively seeking investment opportunities. Over 60 U.S. venture
    capital firms invested in nanotech-related companies in 2000.
    Investment in nanotechnology start-ups will rise from $100 million in
    1999 to nearly a $1billion by 2003. Recent investments include
    NanoPhontonic, a semiconductor company that received over $25mm this
    spring in venture investment. Surface Logic, a nanoelectronics firm
    obtained almost $22 mm in new funding as well.
        All signs demonstrate that this growth curve will continue to
    increase rapidly over the next 3-5 years for nanotechnology regardless
    of the current economic slow down. So-called angel investors and
    corporate venturing operations are expected to outpace traditional
    venture capital firm's investments for the foreseeable future due to
    the business models and return times.

    Regional Development
        Ultimately, regional development efforts --the creation of
    technology clusters (Nanotech Valleys if you will)--will fuel the
    explosive growth of the nanotechnology industry. The bringing together
    of universities, government officials, corporations, investors, non-
    profits, start-ups and service firms to coordinate, plan, and develop
    an environment condusive for collaboration and attracting talent is the
    key to developing the industry. Region specific approaches. Region
    specific planning. National--even international--collaboration and
    impact.
        Localized development efforts are already underway from Virginia to
    Texas to California. The NanoBusiness Alliance launched a ``Nanotech
    Hubs Initiative'' a few months back with the hope of jump starting
    regional technology cluster development. We have been overwhelmed.
    Though we have launched efforts in Colorado, New York, San Francisco,
    San Diego, Michigan and Washington DC metro--as well as affiliate
    organizations in the EU and Canada--we have been inundated with calls
    from 35 states and 11 countries to help develop this capacity. They are
    looking for best practices, partners and funding. They are looking for
    roadmaps and shared databases.
        These states and regions are already looking to nanotechnology to
    develop local economies and fuel overall state economic development.
        Some examples:

       New York State: Albany NanoTech is a fully-integrated
            research, development, prototyping, pilot manufacturing and
            education resource managing a strategic portfolio of state-of-
            the-art laboratories, supercomputer and shared-user facilities
            and an array of research centers located at the University at
            Albany--SUNY. Its first research center, the NYS Center for
            Advanced Thin Film Technology, was established to provide its
            company partners with a unique environment to pioneer, develop,
            and test new ideas within a technically aggressive, yet
            economically competitive, research environment. Governor Pataki
            has been instrumental in expanding this center, as has IBM. It
            has served to be a magnet for corporate development and start
            ups. It was recently announced that the SEMATECH--the largest
            semiconductor industry developers--would locate its next
            generation R&D facility at the Center. When the last SEMATECH
            located in Austin it turned the city from a quiet college town
            into one of Americas 5 great technology centers.

       Chicago: Chicago is looking to seize leadership in the
            emerging field of nanotechnology by providing tax subsidies to
            foster a high-tech corridor. The area has also created a
            Chicagoland nanotech initiative of sorts, with large corporate
            players like Boeing and Motorola; nanotech companies like
            NanoPhase and NanoInk; investors; consultants like McKinsey:
            Northwestern's Nanotechnology Center; U Chicago; and Argonne
            National Laboratory all collaborating.

    Foreign Competition
        Nanotechnology is emerging as a truly global technology. Unlike the
    many waves of technological development over the past seventy-five
    years, nanotechnology is not dominated by the United States. The U.S.
    is being outpaced by foreign competition in several areas of
    nanotechnology. Japan, Italy, Israel, Ireland, Switzerland, the
    Netherlands, UK, Germany, Russia, South Korea, China, France, Canada,
    and Australia are all significant players in the field of
    nanotechnology.
        A recent report from the Journal of Japanese Trade & Industry notes
    that the Japanese government views the successful development of
    nanotechnology as the key to ``restoration of the Japanese economy.''
    They are not alone. Funding has grown at unprecedented rates in the
    last three years fueled by the awareness of the U.S. National
    Nanotechnology efforts.

    Problems in the NanoBusiness World
        Not everything is rosy for the future of nanobusiness. Though much
    development has occurred, many obstacles remain. While the NNI and
    overall government nanotech efforts have been a great source of
    .coordination and basic research funding for many, these nanotech
    grants remain among the most competitive in the government.
        In addition, many nanotech companies have emerged from the basic
    research cycle and are addressing issues such as scaling and
    integration. Few government programs address this timeframe. Add to
    that a venture capital sector that is battered, not knowledgeable on
    nanotech and now working in a shortened cycle of investment return and
    you have many nanotech companies falling into what investors term
    ``Death Valley.''
        Another area of concern for nanotech start ups is the current state
    of U.S. intellectual property and the USPTO. The Patent Office is in
    desperate need of training programs to ensure its examiners understand
    nanotechnology. At USPTO, nanotech patent applications--understandably
    due to the wide breadth of application areas the technology covers--go
    down many different review silos at USPTO. Also, several early nanotech
    patents are given such broad coverage, the industry is potentially in
    real danger of experiencing unnecessary legal slowdowns.
        Another grave fear that is often expressed by CEOs, particularly at
    large corporations that are undertaking nanotech R&D, is uneasiness
    over the lack of research on nanotech health and safety issues. More
    than one CEO has raised the specter of ``are we sitting on the next
    asbestos working with all these tiny things.''
        In addition, the current state of technology transfer is lacking by
    any measure. The technology transfer process from government and
    academic labs to the marketplace is impossible at worst--arduous at
    best.
        And lastly, education, as well workforce training and development
    are beginning to become issues among the nanotech community.

    Close
        In closing, nanotechnology the science is indeed now rapidly
    becoming nanotechnology the business. As a nation we have been very
    fortunate to have the visionary support--from both sides of the aisle--
    in developing and maintaining the National Nanotechnology Initiative.
    However, we are now at a cross roads where we must expand the reach of
    this national initiative from the laboratory to the board room. While
    maintaining the development of basic research as a priority, we must
    expand our sights to cultivate the nanotechnology industry and usher in
    a new Industrial Revolution. Again, that is why the 21st Century
    Nanotechnology Research and Development Act is so important.

            1.  We see the Act's ability to strengthen the structure of the
            National Nanotechnology Initiative as being of vital
            importance--increasing the long term stability and growth of
            our Nation's nanotechnology efforts.

            2.  The Act makes the development of the nanotechnology sector
            a major government focus. Increasing understanding and
            awareness of nanotechnology throughout the government's
            political and civil service ranks by providing mechanisms for
            program management and coordination across government agencies
            and White House. We especially support Act's call for the
            development of a government advisory board made up of
            nanotechnology leaders to regularly discuss the state of the
            industry and recommend solutions to the President and Congress.

            3.  Due to real challenges to our Nation's efforts to obtain a
            secure leadership position in nanotechnology and nanobusiness,
            we also strongly support the Act's call for further examination
            and tracking of international funding, development and
            competition in nanoscience and nanobusiness.

            4.  And, we strongly support the Act's efforts to encourage
            nanoscience through additional grants, and the establishment of
            interdisciplinary nanotechnology research centers, as this will
            lead to more innovation and further development of the nanotech
            economy.

        Long term, the Alliance would like to see Congress continue its
    focus on nanotechnology as it becomes nanobusiness and develop
    programs--and expand existing programs--for commercializing
    nanotechnology development.

            a.  Create programs that offer opportunities to entrepreneurial
            start-ups and innovative corporations alike. Programs that
            offer incentives, loans, and funding to take nanotechnology
            innovations into the marketplace.

            b.  Ensure that the USPTO is properly educated and equipped to
            evaluate and approve nanotechnology patents

            c.  Organize an extensive global effort with industry, academia
            and government to study the health and environmental effects--
            good and bad--on nanotechnology now before potential problems
            or even negative intimations arise. The effort should include
            social and scientific studies building on much of the fine work
            of the National Nanotechnology Initiative staff. Ensure that
            publicly accessible materials, events and websites are
            developed to disseminate such information to a broad audience.

            d.  Develop programs, possibly though the Office of Technology
            Policy in the Department of Commerce, economic development
            organizations, universities and industry groups to promote and
            nurture regional nanotechnology cluster development. Create
            best practices reports, guides, and extensive national
            nanobusiness database.

            e.  Develop programs to improve the state of tech transfer at
            government labs and academic institutions which will improve
            the commoditization of emerging technologies

        Again, I would like to thank the Chairman, Senator Allen and the
    Committee for this opportunity to address them.

        Senator Wyden. Mr. Modzelewski, we also understand you
    could provide a couple of demonstrations today, and since you
    are under your 5 minutes, please have at it.
        Mr. Modzelewski. One that we can start off with, if we
    could dim the lights, I am going to demonstrate a technology by
    a company called Evident Technology, which is based in New
    York, and this is a testing kit which basically uses quantum
    dot technology. This technology could be used for everything
    from potentially detecting individual cancer cells in the human
    body to being used actually for lighting sources, everything
    from light bulbs that use less energy to flat screens. It is
    even being used in the electronics industry in semiconductor
    work.
        The thing that you will find most interesting about them is
    your ability to give off a large and intense color spectrum. I
    am going to use a black light to demonstrate that for you. As
    you can see, they are very hard to see initially, but when
    given the color spectrum they can give off an incredible glow,
    and these glows can literally be assigned to pick up individual
    pathogens, even can be used as biosensors for the military and
    be used for individual forms of cancer.
        The thought is, is that this could be advanced in, say,
    cancer research to where you are not only identifying them, but
    are able to link up the light spectrum to things like lasers or
    other ultraviolet sources that could eradicate just the
    individual cells, as opposed to treating the whole area of the
    body.
        Another thing we have is here from a company called
    Infomat, which is a Connecticut-based company, and what they
    are able to do is actually use a flexible ceramic coating, and
    you have instead an incredibly heat-resistant product here, and
    we have the flexible ceramic. We can start looking at things
    like ceramic engines and other things that have long been
    difficult for us to even imagine being able to successfully do
    this. This actual little piece of metal is actually a band that
    the U.S. Navy is beginning to use on some of the development of
    their ships and things along those lines.
        I am not sure if we also want to demonstrate the
    nanochinos. Is anyone interested in that?
        Senator Wyden. We have a huge demand for nanochinos.
        Mr. Modzelewski. You have to understand, this is already in
    the marketplace. There is the availability of nanofibers, and
    these coated fibers create such a level of surface area that
    anything that is spilled on them does not just bead up like
    Scotchgard, but literally is repelled away, and we can actually
    be looking, potentially, within the next decade, for clothing
    that does not need to be cleaned, and you are seeing how grape
    juice, I believe, beads up and works off of the nanochinos.
        Voice: I wipe it and it is all completely dry.
        Senator Wyden. That is unbelievable.
        Voice: If it is submersed, it will release and allow
    washing.
        Mr. Modzelewski. That product is already available. He is
    not wearing something experimental. Big name brands n the
    American fabric industry, Levi's, Lee, Eddie Bauer sell
    nanochinos, nanojeans, and also shirts with such a capacity,
    and in fact Dockers is running a commercial right now where a
    gentleman is in a bar and his buddy keeps pouring a drink on
    him, and he is begging him to stop pouring the drink on him to
    watch how cool the nanotechnology works. And so I think we are
    starting to enter an age right now where, true, we do need the
    basic research, and we should continue to advance that, but we
    are already really seeing this technology start to enter our
    lives in very simple ways, and soon to be more advanced ways.
        I thank you.
        Senator Wyden. Dr. Stupp.

    STATEMENT OF SAMUEL I. STUPP, Ph.D., CHAIRMAN OF THE COMMITTEE
       FOR THE REVIEW OF THE NATIONAL NANOTECHNOLOGY INITIATIVE,
    NATIONAL RESEARCH COUNCIL/THE NATIONAL ACADEMIES, AND BOARD OF
               TRUSTEES PROFESSOR OF MATERIALS SCIENCE,
            CHEMISTRY AND MEDICINE, NORTHWESTERN UNIVERSITY

        Dr. Stupp. Mr. Wyden, Mr. Allen, thank you for the
    opportunity to present this statement. I chaired the review
    committee for the NNI of the National Research Council. I am
    here representing a committee which was composed of a mix of
    individuals from academe and industry, and drawn from a variety
    of scientific and engineering disciplines relevant to the topic
    of nanoscience and nanotechnology. The committee spent 9 months
    reviewing the NNI and writing the report that is the basis of
    my testimony to you today. During those 9 months, we heard from
    all of the agencies currently being funded under the NNI, and
    most of the agencies that are planning on joining the NNI in
    the near future.
        In addition to the information gathered from these
    agencies, we also relied on the knowledge committee members
    have about activities ongoing in our universities, in the
    private sector, in State and local regions, and
    internationally. The committee was asked to review the NNI with
    particular attention to (1) whether the balance of the overall
    research portfolio is appropriate, (2) whether the correct seed
    investments were being made now to assure U.S. leadership in
    nanoscale work in the future, (3) whether partnerships were
    being used effectively to leverage the Federal investment in
    this area, and (4) whether the coordination and management of
    the program is effective, such that the whole is greater than
    the sum of its parts.
        Our committee detailed many of the important outcomes that
    could come from nanotechnology, including applications in
    medical diagnostics, new therapies for disease and injury, the
    very exciting frontier of regenerative medicine, which is not
    discussed all that frequently, and homeland security as well.
        The committee found that the agencies participating in the
    NNI have made a good start in organizing and managing such a
    large interagency program. The committee was impressed with the
    leadership and level of multiagency involvement in the NNI,
    particularly the leadership role played by the National Science
    Foundation. Programs funded to date that were presented to the
    committee were all of an appropriately high technical merit,
    and the participating agencies have sponsored a number of
    influential symposia in nanotechnology.
        The committee formulated 10 major recommendations to help
    the NNI agencies build on their efforts to date to further
    strengthen the implementation of the initiative. So concerning
    the research portfolio, the committee recommended that (1) more
    emphasis be given to long-term funding of new concepts in
    nanoscale science and technology. Truly revolutionary ideas
    will need sustained funding to achieve results and produce
    important breakthroughs. There are not currently enough funding
    mechanisms to give longer term support to higher risk but
    potentially groundbreaking ideas. There are more of those in
    Europe than here in the U.S.
        (2) The committee recommends increasing the multiagency
    investments in research at the intersection of nanoscale
    technology and biology. We can already see applications of
    nanoscale science and technology that will have significant
    impacts in biotechnology and medicine. Bionano is not currently
    as well-represented in the NNI portfolio as it should be. Since
    many of the advances foreseen in this area involve the marriage
    of physical sciences and engineering with biology, these
    investments should focus on collaborations between the NIH and
    the other NNI agencies.
        (3) The committee recommends investment also in the
    development of new instruments for measurement and
    characterization of nanoscale systems. Historically, many
    important advances in science happened only after the
    appropriate instruments became available.
        (4) The committee recommends that NSET develop a new
    funding strategy to ensure that the societal implications
    become an integral and vital component of the NNI.
        On whether the ``correct'' seed investments are being made
    now for the future of U.S. leadership in nanotechnology, the
    committee recommends, (1) that NNI agencies provide strong
    support for the development of an interdisciplinary culture for
    nanotechnology. Nanoscale research is leading us into areas
    involving the convergence of many disciplines, biology,
    chemistry, physics, material science, all areas of engineering.
    However, the overall value system used by the scientific
    community to judge its members continues to discourage
    interdisciplinary research.
        Looking at the question of whether partnerships are being
    used effectively in the NNI, the committee found that
    industrial partnerships need further stimulation and nurturing
    to accelerate the commercialization of NNI development. The
    U.S. is most likely to realize economic benefits from
    nanotechnology when its underlying intellectual property comes
    from U.S.-based laboratories, institutions, and corporations.
        (2) Interagency partnerships also require further
    attention. While the NNI implementation plan lists major
    interagency collaborations, the committee has no sense that
    there is any common strategic planning occurring in those
    areas, any significant interagency communication between
    researchers in those areas, or any significant sharing of
    results before publication in the open literature.
        To stimulate meaningful interagency collaborations, we
    proposed a special fund within NNI, perhaps under the oversight
    of OSTP, for grants to exclusively support interagency research
    programs.
        On the topic of program management and evaluation, the
    committee recommends that NSET develop a crisp, compelling,
    overarching strategic plan for the NNI which includes both
    short, medium, and long-term goals.
        The committee recommends that NSET develop performance
    metrics to assess the effectiveness of the NNI in meeting its
    objectives and goals. Currently, the programs have only been
    evaluated as a part of the procedures of individual agencies.
        (3) The committee recommends that OSTP establish an
    independent standing nanoscience and nanotechnology advisory
    board now. The existence of such a board would help the NSET
    agencies vision beyond their own individual missions. It could
    identify and champion research opportunities that do not fit
    conveniently into any one agency's mission. To ensure that
    nanoscale research continues its progress towards its ultimate
    potential, such a board should be composed of leaders from
    industry and academia with scientific, technical, social
    science or research management credentials.
        I think this is the end of my statement.
        [The prepared statement of Dr. Stupp follows:]

    Prepared Statement of Samuel I. Stupp, Ph.D., Chairman of the Committee
      for the Review of the National Nanotechnology Initiative, National
        Research Council/The National Academies, and Board of Trustees
            Professor of Materials Science, Chemistry and Medicine,
                            Northwestern University

        Good morning, Mr. Chairman and Members of the Committee. My name is
    Samuel Stupp. I am Board of Trustees Professor of Materials Science,
    Chemistry and Medicine at Northwestern University, and chaired the
    Committee for the Review of the National Nanotechnology Initiative of
    the National Research Council. The Research Council is the operating
    arm of the National Academy of Sciences, National Academy of
    Engineering, and the Institute of Medicine, chartered by Congress in
    1863 to advise the government on matters of science and technology.
        I am here representing a committee that was composed of a mix of
    individuals from academe and industry, and drawn from a variety of
    scientific and engineering disciplines relevant to the topic of
    nanoscience and nanotechnology. The committee spent nine months
    reviewing the National Nanotechnology Initiative or NNI, and writing
    the report that is the basis of my testimony to you today. During those
    nine months, we heard from all of the agencies currently being funded
    under the NNI, and most of the agencies that are planning on joining in
    the NNI in the near future. In addition to the information gathered
    from these agencies, we also relied on the knowledge committee members
    have about activities on-going in our universities, in the private
    sector, in state and local regions, and internationally.
        The committee was asked to review the NNI with particular attention
    to:

       Whether the balance of the overall research portfolio is
            appropriate,

       Whether the correct ``seed'' investments were being made now
            to assure U.S. leadership in nanoscale work in the future,

        Whether partnerships were being used effectively to leverage the
    federal investment in this area, and

       Whether the coordination and management of the program is
            effective, such that ``the whole is greater than the sum of its
            parts.''

        In writing its report, the committee was very concerned with
    communicating to the reader the importance of nanotechnology and its
    future potential. There have been a lot of promises made for the
    wonders which nanotechnology will provide for society, and while there
    has been hype, the committee can say definitively that nanoscience and
    nanotechnology are not dreams but are here today in products and
    technologies we currently use. You already use nanotechnology everyday
    in applications as mundane as the sunscreen and lipstick you may be
    wearing, to those as sophisticated as the high-density hard disk that
    runs your pc or laptop. Current research results point to even more
    applications in the near future, such as improved medical diagnostics
    and new therapies for disease and injury.
        The committee found that the agencies participating in the NNI have
    made a good start in organizing and managing such a large interagency
    program. The committee was impressed with the leadership and level of
    multi-agency involvement in the NNI, particularly the leadership role
    played by the National Science Foundation. Programs funded to date that
    were presented to the committee were all of an appropriately high
    technical merit, and the participating agencies have sponsored a number
    of influential symposia in nanoscale science and technology, including
    one on the potential ethical, legal, and social issues involved in
    these technical advances.
        The committee formulated ten major recommendations to help the NNI-
    participating agencies build on the foundation of their efforts to date
    to further strengthen the implementation of the initiative.
        Concerning the balance of the research portfolio, the committee
    recommended that:

       More emphasis be given to long-term funding of new concepts
            in nanoscale science and technology. Truly revolutionary ideas
            will need sustained funding to achieve results and produce
            important breakthroughs. There are not currently enough funding
            mechanism to give longer-term support to higher risk but
            potentially groundbreaking ideas.

       The committee recommends increasing the multiagency
            investments in research at the intersection of nanoscale
            technology and biology. We can already see applications of
            nanoscale science and technology that will have significant
            impacts in biotechnology and medicine. ``Bio-nano'' is not
            currently as well represented in the NNI portfolio as it should
            be. Since many of the advances foreseen in this area involve
            the marriage of physical sciences and engineering with biology,
            these investments should focus on collaborations between NIH
            and the other NNI agencies.

       The committee recommends investment in the development of
            new instruments for measurement and characterization of
            nanoscale systems. Historically, many important advances in
            science happened only after the appropriate investigative
            instruments became available. Since one must be able to measure
            and quantify a phenomenon in order to understand and use it, it
            is critical that we develop tools that allow for more
            quantitative investigations of nanoscale phenomena.

       The committee recommends that NSET develop a new funding
            strategy to ensure that the societal implications become an
            integral and vital component of the NNI. The current level and
            diversity of efforts concerning societal implications of
            nanotechnology is disappointing. Federal agencies have not
            given sufficient consideration to societal implications of
            nanoscale science and technology. To ensure that work in this
            area is funded, the participating agencies should develop a
            funding strategy that treats societal implications as a
            supplement or set-aside to agency core budget requests, which
            is then awarded to agencies willing and capable to engage in
            this type of work.

        On whether the correct ``seed'' investments are being made now for
    the future of U.S. leadership in nanoscale science and technology, the
    committee recommends:

       That NNI agencies provide strong support for the development
            of an interdisciplinary culture for nanoscale science and
            technology. Nanoscale research is leading us into areas
            involving the convergence of many disciplines--biology,
            chemistry, physics, materials science, mechanical engineering,
            and others. However, the overall value system used by the
            scientific community to judge its members continues to
            discourage interdisciplinary research. Although the number of
            interdisciplinary research groups will grow as it becomes
            evident that this approach is necessary to make the most
            exciting advances in nanoscale research, federal agencies
            should accelerate this process by developing creative programs
            that encourage interdisciplinary research groups in academia.

        Looking at the question of whether partnerships are being used
    effectively in the NNI, the committee found that:

       Industrial partnerships need further stimulation and
            nurturing to accelerate the commercialization of NNI
            developments. The U.S. is most likely to realize economic
            benefits from nanoscale science and technology when this
            technology and its underlying intellectual property come from
            U.S.-based laboratories, institutions, and corporations.

       Interagency partnerships also require further attention.
            While the NNI Implementation Plan lists major interagency
            collaborations, the committee had no sense that there is any
            common strategic planning occurring in those areas, any
            significant interagency communication between researchers
            working in those areas, or any significant sharing of results
            before publication in the open literature. All NNI funds are
            currently directed by each agency to the projects and programs
            of that agency's choice. To stimulate meaningful interagency
            collaborations, the committee recommends the creation of a
            special fund within NNI, perhaps under the oversight of the
            Office of Science and Technology Policy (OSTP), for grants to
            exclusively support interagency research programs.

        On the topic of program management and evaluation, the committee
    recommends:

       That NSET, the Nanoscale Science, Engineering and Technology
            subcommittee of the National Science and Technology Council,
            develop a crisp, compelling, overarching strategic plan for the
            NNI. This plan should articulate short, medium, and long-term
            goals, and emphasize those long-range goals that move results
            out of the laboratory and into society. In particular, the
            strategic plan should include a consistent set of anticipated
            outcomes for each funding theme and each Grand Challenge in the
            NNI implementation plan.

       The committee recommends that NSET develop performance
            metrics to assess the effectiveness of the NNI in meeting its
            objectives and goals. Currently the programs have only been
            evaluated as part of the GPRA procedures of individual
            agencies.

       Finally, the committee recommends that OSTP establish an
            independent standing Nanoscience and Nanotechnology Advisory
            Board (NNAB). The existence of such a board would help give the
            NSET agencies vision beyond their own individual missions. It
            could identify and champion research opportunities that don't
            fit conveniently into any one agency's mission to ensure that
            nanoscale science and engineering continue to progress toward
            their ultimate potential. Such a board should be composed of
            leaders from industry and academia with scientific, technical,
            social science, or research management credentials.

        With this, I will be happy to take your questions on the report and
    its findings.
                                     ______

     THE NATIONAL ACADEMIES, DIVISION OF ENGINEERING AND PHYSICAL SCIENCES
    Small Wonders, Endless Frontiers: A Review of the National
            Nanotechnology Initiative--Summary

        Background. Nanoscale science and technology, often referred to as
    ``nanoscience'' or ``nanotechnology,'' is science and engineering at
    the scale of 10-\9\ meters, or 1/100,000 the width of a
    human hair. In the last two decades, researchers have begun developing
    the capability to manipulate matter at the level of single atoms and
    small groups of atoms, and to characterize the properties of materials
    and systems at that scale. This capability has led to the astonishing
    discovery that clusters of small numbers of atoms or molecules--
    nanoscale clusters--often have properties (such as strength, electrical
    resistivity and conductivity, and optical absorption) that are
    significantly different from the properties of the same matter in
    either the single molecule or bulk scales.
        Using these discoveries, scientists and engineers have begun
    controlling the structure and properties of materials and systems.
    Current applications of nanoscale materials includes titanium dioxide
    and zinc oxide powders which are used by cosmetics manufacturers for
    facial base creams and sunscreen lotions. Nano-structured materials
    have been integrated into complex products such as the hard disk drives
    that store information and the silicon integrated circuit chips that
    process information in every Internet server and personal computer. In
    the future, these researchers anticipate that nanoscale work will
    enable the development of materials and systems with dramatic new
    properties relevant to virtually every sector of the economy, such as
    medicine, telecommunications, and computers, and to areas of national
    interest such as homeland security. With potential applications in
    virtually every existing industry, and new applications yet to be
    discovered, there is no doubt that nanoscale science and technology
    will emerge as one of the major drivers of economic growth in the
    decades to come.

        Recognizing the tremendous scientific and economic potential of
    nanoscale science and technology, in 1996 a federal inter-agency
    working group formed to consider the creation of a National
    Nanotechnology Initiative (NNI). As a result of this effort, around one
    billion dollars have been directed towards NNI research since 2001. At
    the request of officials in the White House Economic Council and NNI-
    participating agencies, the National Research Council (NRC) agreed to
    review the NNI. A review committee was formed by the NRC and asked to
    consider topics such as the current research portfolio of the NNI, the
    suitability of federal investments and inter-agency coordination
    efforts in this area.
        Findings and Recommendations. The committee was impressed with the
    leadership and level of multi-agency involvement in the NNI.
    Specifically, the committee commends the leadership of the National
    Science Foundation in the establishment of the multi-agency Nanoscale
    Science, Engineering and Technology (NSET) committee as the primary
    coordinating mechanism for the NNI. NSET has played a key role in
    establishing research priorities, identifying Grand Challenges, and
    involving the U.S. scientific community in the NNI.
        Nevertheless, the committee has formulated a limited number of
    recommendations to further strengthen the implementation of NNI. Using
    information provided by all federal agencies involved in the NNI, the
    review panel considered the structure of this initiative over the past
    several months and makes the following ten recommendations:

       The committee recommends that the Office of Science and
            Technology Policy (OSTP) establish an independent standing
            Nanoscience and Nanotechnology Advisory Board (NNAB) to provide
            advice to NSET member agencies on research investment policy,
            strategy, program goals, and management processes. This board
            could identify and champion research opportunities that do not
            conveniently fit within any single agency's mission. It should
            be composed of leaders from industry, and academia with
            scientific, technical, social science, or research management
            credentials.

       NSET should develop a crisp, compelling, overarching
            strategic plan that emphasizes long-range goals that move
            results out of the laboratory and into the service of society.
            The Strategic Plan should include a consistent set of
            anticipated outcomes for each theme and grand challenge and
            estimated time frames and metrics for achieving those outcomes.

       The committee recommends that the NNI support more long-term
            funding and investment in nanoscale science and technology.
            Establishing a proper balance between the short-term and long-
            term funding of nanoscale science and technology will be
            critical to realizing its potential.

        The committee recommends increased multi-agency investments in
    research at the intersection between nanoscale technology and biology.
    The relevance of the NNI to biology, biotechnology, and the life
    sciences cannot be overstated. Cellular processes are inherently
    nanoscale phenomena. Barriers to inter-agency and inter-disciplinary
    work must be over come to enable such developments.

       Historically, many important advances in science have come
            only after appropriate investigative instruments have become
            available. The committee recommends the NSET create programs to
            facilitate the invention and development of instruments for
            nanoscale science and technology. This should include
            analytical instruments capable of modeling, manipulating,
            tailoring, characterizing, and probing at the nanoscale.

       To help foster interagency collaboration the committee
            recommends the creation of a special fund for Presidential
            Grants, under OSTP management, to support interagency research
            programs relevant to nanoscale science and technology. These
            grants should be used exclusively to fund meaningful
            interagency collaborations that cross mission boundaries,
            particularly among the National Institutes of Health, the
            Department of Energy, and the National Science Foundation.

       Noting the need for greater interdisciplinary research, the
            Committee recommends that NNI provide strong support for the
            development of an interdisciplinary culture within science. To
            date, NSET agencies have encouraged multidisciplinary
            collaborations, but creative programs are needed that encourage
            the development of self-contained interdisciplinary groups as
            well.

       To enhance the transition from basic to applied research,
            the committee recommends that industrial partnerships be
            stimulated and nurtured, both domestically and internationally,
            to help accelerate the commercialization of NNI developments.
            NSET should create support mechanisms for coordinating and
            leveraging state initiatives, which focus on fostering local
            industry, to organize regional competitive clusters for
            nanoscale science and technology development.

       The committee recommends that the NSET develop a new funding
            strategy to ensure that consideration and assessment of
            societal implications becomes an integral and vital part of the
            NNI. This effort will help ensure that the ``next industrial
            revolution'' produces social and economic as well as technical
            benefits.

       NSET should develop metrics to assess the effectiveness of
            the NNI in meeting its objectives and goals. The committee sees
            a need to measure the progress of the NNI as a whole, with
            measurable factors including quality, relevance, productivity,
            resources, and movement of research concepts toward
            applications.

        Senator Wyden. Thank you. Dr. Williams.

            STATEMENT OF R. STANLEY WILLIAMS, HP FELLOW AND
                  DIRECTOR, QUANTUM SCIENCE RESEARCH,
                            HEWLETT-PACKARD

        Dr. Williams. Chairman Wyden, Senator Allen, and Members of
    the Subcommittee, I thank you for the opportunity to testify
    before you on the topic of nanotechnology. My name is Stanley
    Williams, and I work for Hewlett-Packard Company in Palo Alto,
    California.
        To appreciate the smallness of a nanometer, first consider
    shrinking yourself down in three-dimensional factors of 1,000.
    You are now the size of an ant. Now shrink the ant down by
    another factor of 1,000. You would be the size of a red blood
    cell, the smallest cell in your body. Now take that cell and
    shrink it down by another factor of 1,000. That is the size of
    a nanometer, the size of a few atoms.
        Nanoscience is the study of structures that are just a few
    atoms in size, and it is the scientific field where hundreds of
    years of advances in physics, chemistry, and biology have just
    recently converged. The unifying theme is that the intrinsic
    properties of matter such as color, chemical reactivity, and
    electrical resistivity depend upon the size and shape of matter
    only at the nanoscale.
        Nanoengineered systems have the broadest possible
    arrangement of properties that human beings can design, which
    in turn means that building anything with control at the
    nanometer scale will enable us to produce them in the most
    efficient possible manner. Thus, nanotechnology is a collection
    of tools available to a broad range of scientists and
    engineers. However, it is not a complete solution to any
    problem. We will increasingly find that the crucial or enabling
    component of a system is engineered at the nanometer scale.
        Indeed, Deutsche Bank in Berlin has estimated that the
    total value of nanotechnology-enabled products and services
    will be $116 billion this year. Thus, as we consider creating a
    national nanotechnology program, we must not neglect other
    scientific and engineering areas that provide the other
    components to complete solutions. I am going to give three
    examples that illustrate the breadth and scope of what is
    possible in the present, in the near future, and the longer
    term of nanotechnology.
        By mixing hard and tough materials at the nanoscale, new
    composites have been made with levels of both properties never
    seen before in a single material. In the past year, General
    Motors has introduced a polymer clay nanocomposite already
    mentioned by Chairman Wyden that is used for running boards on
    their pickup trucks, and they plan to utilize this new
    composite in an increasing number of components in their
    vehicles in the future. In this one example, we see that a
    nanotechnology can help the fuel economy, the safety, the
    repair costs, and the ecological impact of our transportation
    system.
        I believe one of the most significant nanoscience
    discoveries of the past couple of years is that carbon
    nanotubes and semiconductor nanowires are extremely sensitive
    sensors of chemical compounds. They should actually be ideal in
    home defense applications for the detection of explosives,
    poisons, and biological agents. Given an appropriate level of
    support, it should be possible to begin deploying such sensors
    in susceptible areas within 2 to 3 years.
        On the 5 to 10 year time frame, it should be possible to
    cheaply manufacture such sensors in the hundreds of millions to
    billions of units per year to provide continuous monitoring of
    our public buildings, post offices, transportation networks,
    and other institutions vulnerable to terrorist attack.
        On a longer time frame, recent discoveries and
    announcements in the areas of nanoelectronic memory and logic
    circuits promise to extend the dramatic improvements in
    performance of computers that we have seen well into the
    future. These advances also promise to extend the economic
    benefits of the electronics industry that the U.S. has enjoyed
    for many more decades.
        From these examples, we see that nanotechnology has the
    potential to greatly improve the properties of nearly
    everything that humans currently make, and will lead to the
    creation of new medicines, materials, and devices that will
    substantially improve the health, wealth, and security of
    American and global citizens.
        However, current experience in the United States shows that
    the number of excellent research proposals submitted for
    nanotechnology-related research far outstrips the available
    funds. The ramp-up in funding must be steep. I estimate
    approximately 30 percent a year, and sustained for at least the
    next 5 years. A national nanotechnology program will allow for
    continuous monitoring and feedback to make sure the best ideas
    are funded.
        Also, increases in nanotechnology support must be
    consistent with an overall increase in the total physical
    science and engineering base in agencies such as the National
    Science Foundation, the Department of Energy, and the
    Department of Defense.
        My primary concern for U.S. nanotechnology is that we will
    not train or retain enough of the best researchers to be the
    leaders in this crucial area. Currently, the United States is
    supplying only 25 percent of the global funding for
    nanotechnology research by national Governments. Other
    countries are determined to keep pace and even surpass our
    efforts by investing heavily and by recruiting the best and the
    brightest researchers away from the United States.
        We will need to leverage our academic, Government, and
    corporate research capabilities to compete globally. However,
    relations between large corporations and American universities
    have never been worse. Severe disagreements have arisen over
    conflicting interpretations of the Bayh-Dole act. Many large
    U.S.-based corporations now work with the leading institutions
    in France, Russia, and China, which are willing to offer
    extremely favorable intellectual property terms for their
    support.
        The U.S. Government has several roles to play to ensure
    that America leads the world in nanotechnology. The first is to
    invest sufficiently in the basic research enterprise which
    produces the scientists and engineers who will invent the
    future. The second is to act as an early adopter of new
    technologies, especially in the areas where technological
    advances enhance our security.
        Finally, the Government should consider a new role, that of
    mediator to bring together academic, corporate, and national
    labs so that they can work together, and the Nation can share
    in the benefits of their discoveries.
        Thank you very much.
        [The prepared statement of Dr. Williams follows:]

      Prepared Statement of R. Stanley Williams, HP Fellow and Director,
                   Quantum Science Research, Hewlett-Packard

        Chairman Wyden, Senator Allen, Members of the Subcommittee, I thank
    you for allowing me--on behalf of Hewlett-Packard Company--the
    opportunity to testify before you on the topic of nanotechnology.
        Few words have generated as much hype and controversy over the past
    few years as `nanotechnology'. On the one hand, some enthusiasts have
    established a quasi-religion based on the belief that nanotechnology
    will generate infinite wealth and life-spans for all humans. On the
    other, alarmists fear that nanotechnology will somehow end life as we
    know it, either by poisoning the environment or releasing some type of
    self-replicating nanobot that conquers the earth. Neither scenario is
    realistic, and both have been propagated by people who are good
    communicators but actually have no relevant scientific experience in
    the nanosciences.
        This knowledge gap exists primarily because most scientists
    actually working in the field are either unable to communicate what
    they are doing to lay audiences or think they are too busy to try. I am
    afraid that many scientists are guilty of believing that the public in
    general and policy makers in particular are incapable of understanding
    science, and that their work should be supported simply because it is
    important and beautiful. This patronizing attitude has not served the
    citizens of the U.S. or American scientists. It is certainly true that
    policy makers do not have the time to understand the full details of
    the research in any field of scientific endeavor, just as most
    scientist have no clue about the intricacies of the legislative
    process. However, we owe it to each other and to the American public to
    engage in meaningful dialog. Our two communities may not understand the
    details of what the other does, but we should each appreciate what the
    other has to contribute to the overall benefit of society.
        I will attempt to provide you with some of that appreciation today
    by providing a high-level description and a series of analogies, each
    of which is certainly flawed but taken together I hope they provide you
    with a picture that you can utilize in your deliberations.
    Nanotechnology is particularly frustrating to describe. It is not one
    thing, and it is certainly not all things. I have been told by public
    relations experts that I need to simplify the field and provide a
    single rallying point upon which policy makers can focus. However, this
    would do a grave injustice to the field and I think in the long run it
    is an insult to your intelligence. Therefore, let me attempt to
    describe what nanotechnology has to offer by delving into some of the
    complexity.
        First, one needs to appreciate the smallness of a nanometer.
    Consider shrinking yourself down in all three dimensions by a factor of
    1000--you would become the size of a fairly small ant. Now take that
    ant and shrink it down by a factor of 1000--it would be about the size
    of a single red blood cell, which are the smallest cells in your body.
    Finally, shrink that red blood cell by a factor of 1000--that is the
    size of a nanometer, essentially the width of a few atoms. When
    thinking explicitly about this as a fundamental building block, Richard
    Feynman was truly prescient when he said there is `plenty of room at
    the bottom'.
        Nanoscience, the study of structures that are a few nanometers in
    size, is the field where hundreds of years of advances in the fields of
    physics, chemistry and biology have come together in just the past
    decade. Each discipline naturally and separately evolved toward this
    common goal through a series of intellectual advances, instrument
    developments and experimental discoveries. A significant fraction of
    the Nobel prizes in physics, chemistry and medicine in the past 10
    years have been awarded for research discoveries at the nanoscale. Now
    that all three disciplines have arrived at this same goal, each has
    realized that it can learn much from the others, so that the field of
    nanoscience has transcended traditional academic boundaries. Engineers
    have been very quick to adapt the insights gained at the nanoscale, and
    in many cases have actually been the leaders in recognizing the trans-
    disciplinary synergies available. Material science, bio-engineering and
    electrical engineering are all rapidly becoming components of a nano-
    engineering super-discipline. The unifying issue for engineering is
    that the intrinsic properties of matter, such as color, chemical
    reactivity, and electrical resistivity, depend on size and shape only
    at the nanoscale. Thus, nano-engineered systems have the broadest
    possible range of properties that can be designed, which in turn means
    that building anything with control down to the nanometer scale will
    enable them to be produced in the most efficient possible manner. Thus,
    nanotechnology can and will be applied to everything made by human
    beings--it will allow us to dramatically improve nearly everything that
    we currently make, and it will enable us to create an entire range of
    new materials, medicines and devices that we cannot even conceive of
    today. Human cleverness is at a premium--which means high value added
    products and high wages for companies and countries that dominate
    nanotechnology.
        With that said, we must realize that nanotechnology is a collection
    of new tools available to a broad range of scientists and engineers--it
    is not a complete solution to any problem. For the next several
    decades, there will be very few cases in which an entire product is the
    result of nanotechnology, but more and more we will find that the
    crucial or enabling component of a system is engineered at the
    nanometer scale. A current example of this is the giant magneto-
    resistance, or GMR, read head currently found in hard disk drives for
    computers--the recent dramatic increase in storage capacity of disk
    drives is directly attributable to the fact that GMR heads have
    components that are nano-engineered. The value of the read heads alone
    is fairly small, but they enable a multi-billion dollar per year
    industry. Indeed, Matthias Werner of Deutsche Bank has estimated that
    the total value of nanotechnology-enabled products will be $116 billion
    in 2002, and will increase dramatically in the near future. Thus, as we
    think about increasing support for the U.S. Nanotechnology Initiative,
    we must not neglect other disciplines that will also be contributing
    necessary components to complete solutions. As in all things, a
    balanced approach is essential.
    What are the recent advances in nano science and engineering?
        There have been so many recent advances in the nano sciences and
    engineering in recent past I could take up all my time just listing
    them. Let me give just three examples that illustrate the breadth and
    scope of what is possible in the present, the near future, and the
    longer term.
        During the past couple of years, a significant number of new
    nanocomposite materials have come into the market place. These
    materials are engineered to combine properties that natural materials
    have never displayed, such as hardness and toughness. Naturally hard
    materials such as diamond shatter easily, whereas naturally tough
    materials like wood are easy to scratch or dent. However, by mixing
    hard and tough materials at the nanoscale, new composite materials can
    be made with levels of the two properties never seen before. In the
    past year, General Motors has introduced a polymer-clay nanocomposite
    material that is used for a dealer installed optional running board on
    their SUVs and pickup trucks. This material is not only harder and
    tougher, but it is also lighter and more easily recycled than other
    reinforced plastics, and GM plans to utilize it in more and more
    components of their vehicles as economies of scale make it cheaper. In
    this one example, we see that a nanotechnology can help the fuel
    economy, the safety, the maintenance cost, and the ecological impact of
    our transportation system. In the future, nanocomposites will become
    increasingly sophisticated and truly smart, with the ability to adapt
    to new environments and even to self-repair.
        One of the most significant nanoscience discovories of the past
    couple of years that came out of Stanford, Harvard and UCLA is that
    nanowires, especially carbon nanotubes and semiconductor wires, can be
    used as extraordinarily sensitive detectors of light and of chemical
    and biological agents. In this case, the nanowires have such a small
    diameter that any change on the surface of the nanowire has a dramatic
    effect on its electrical conductivity. There is already a significant
    activity in the U.S. and abroad to build sensors based on this
    discovery. These sensors can be used for medical diagnostics to detect
    and report extremely small amounts of pathogens for the early detection
    of disease such as a known cancer or even a new bacterial or viral
    infection not previously known. Prof. James Heath of UCLA has proposed
    a vision in which a laboratory on a chip with nanosensors could help
    investigators go from a new `bug to drug' in 24 hours. However,
    probably their most pressing near term application will be for security
    applications for the detection of explosives, chemical warfare agents
    and biological threats. Given an appropriate level of support, it
    should be possible to begin deploying such sensors in sensitive areas
    within two to three years. Given economies of scale, it should be
    possible on the five to ten year time frame to cheaply manufacture such
    sensors in the hundreds of millions to billions of units to provide
    continuous monitoring our public buildings, post offices,
    transportation networks and other institutions vulnerable to terrorist
    attack.
        I will also mention that on a longer time frame, recent discoveries
    and announcements in the area of nanoelectronic memory and logic
    circuits promise to extend the dramatic improvements in performance for
    cost that we have seen over the past 40 years. These advances promise
    to extend the economic benefits of the electronics industry that the
    U.S. has enjoyed for several decades, and also continue the efficiency
    with which we conduct our business and government affairs. We will see
    a wide variety of new products emerging, but most important of all we
    will see our electronic tools become much easier and intuitive to use.

    What is the significance of and potential for the development and
            deployment of nanotechnology?
        From these examples, we can see that nanotechnology has the
    potential to greatly improve the properties of nearly everything that
    humans currently make, and will lead to the creation of new medicines,
    materials and devices that will substantially improve the health,
    wealth and security of American and global citizens.

    Is the Federal Government adequately investing in nanotechnology (i.e.
            perspective on the National Nanotechnology Initiative)?
        Given the starting point of the NNI in the year 2000 and budgetary
    realities, I think the current funding for nanotechnology is
    appropriate. It would be a mistake to put too much money earmarked for
    nanotechnology too quickly into the research community, since it could
    not adjust and efficiently absorb that funding . However, current
    experiences show that the number of excellent proposals for research
    funding in nanoscience and engineering far outstrips the available
    funds, and thus the ramp-up must be steep, approximately 30 percent per
    year, and sustained for at least the next five years. A National
    Nanotechnology Program will allow for continuous monitoring and
    feedback to make sure that the best ideas are funded. Also, increases
    in nanotechnology support must be consistent with an overall increase
    in the total physical science and engineering base in agencies such as
    the National Science Foundation, the Department of Energy, and the
    Department of Defense.
        As a nation, we have neglected our investments in physical sciences
    and engineering over the past decade. We have forgotten that these have
    been the drivers for our current level of material well being. The
    analogy is that physical science and engineering have been orchards,
    and we have been busily harvesting the fruits of those orchards for the
    past 20 years. However, we as a nation have forgotten that if we want
    to continue to harvest from such orchards, we must continually be
    planting new trees. As a fraction of GNP, our investments in basic
    research in the physical sciences and engineering have declined nearly
    30 percent over the past decdade. This state of affairs has convinced
    American young people that there is no future for them in these
    disciplines, even though the potential in these areas is great.

    As an expert and a leader in this field what are your concerns in the
            nanotechnology area?
        My primary concern is that we in the United States will not have
    enough of the best researchers to be the leaders in this crucial area.
    Currently, the U.S. is supplying approximately 25 percent of the global
    federal funding for nanotechnology. Other countries are determined to
    keep pace and even surpass our efforts. Even though Japan has
    experienced significant economic problems, they make certain that their
    NNI meets or exceeds the funding levels approved in the U.S.. The
    European community is doing the same. Korea, Singapore, Taiwan and
    China are pouring a much higher percentage of their economy into
    research in this area, and when considering the local purchasing power
    of currencies, the PRC has the largest NNI in the world in terms of the
    number of researchers they intend to support. Another significant part
    of the NNIs of all other nations is that they have set aside
    significant funds to recruit senior and talented researchers from other
    countries, and for the most part they are targeting the U.S. The
    primary requirement for federal support of basic research, from a large
    corporation point of view, is the training of the people needed in our
    corporate research and development labs to invent the new products that
    secure our futures. We are going to have to be smarter and more
    efficient going forward--we need cooperation among government at all
    levels, national labs, and corporate R&D facilities.
        I also have some secondary concerns for the future health of the
    U.S. R&D enterprise.
        Largely as a result of the lack of federal funding for research,
    American Universities have become extremely aggressive in their
    attempts to raise funding from large corporations.
        Severe disagreements have arisen because of conflicting
    interpretations of the Bayh-Dole act. Large U.S. based corporations
    have become so disheartened and disgusted with the situation they are
    now working with foreign universities, especially the elite
    institutions in France, Russia and China, which are more than willing
    to offer extremely favorable intellectual property terms.
        The situation with respect to corporate partnering with U.S.
    National Labs is not much better. In this case, inconsistent policies,
    the long time lines to negotiate relationships, and constantly shifting
    government priorities often make it too difficult for companies to
    partner with National Labs. Again, there is an international market
    place. National Labs in other countries are aggressively courting
    American companies. Perhaps the major example of this is Center for
    Innovation in Micro and Nano Technologies, or Minatec, in Grenoble,
    France, which provides access to facilities and a source of students
    for companies that locate research labs on their campus.
        The most important problem of all is that we have lost sight of the
    fact that government and corporate funds spent on research are not
    expenditures or luxuries that can be cut at a whim, they are essential
    investments to the long term viability of an enterprise. We have
    neglected those investments for a long time now. The prosperity of the
    1990's was prepared by the investements of the 1960's, when the U.S.
    Federal Goverment was investing 2 percent of GNP on R&D. That
    investment has paid off many fold over the decades, but because we
    became wealthy, we forgot that we needed to keep investing to stay
    wealthy. The impatience of corporate boards and institutional investors
    have placed too strong a focus on short term results with too little
    long-term investment. A significant factor in the current economic
    situation, especially in the high tech sector, is that we do not have
    enough new and compelling products and services to generate customer
    demand. The internet bubble was a failed experiment to substitute
    clever business plans for new goods.

    How should and could government-industry collaboration enhance research
            and development in the nanotechnology area?
        The U.S. government has several roles to play to insure that
    America leads the world in nanotechnology. The first is to invest
    sufficiently in the basic research enterprise, which produces the
    scientists and engineers who will invent the future. The second is to
    act as an early adopter of new technologies, especially in the areas
    where technological advantage enhances our security. Finally,
    government should consider a new role, that of mediator to bring
    together academic, corporate and national research labs so they can
    work together and the nation can share in the benefits of their
    discoveries.

        Senator Wyden. Thank you, very helpful. Dr. Swami, welcome.

          STATEMENT OF NATHAN SWAMI, DIRECTOR, INITIATIVE FOR
    NANOTECHNOLOGY, COMMONWEALTH OF VIRGINIA, AND MICROELECTRONICS
                           PROGRAM DIRECTOR,
                         UNIVERSITY OF VIRGINIA

        Dr. Swami. Thank you, Mr. Chairman and Senator Allen. My
    name is Nathan Swami, and I am here representing the Initiative
    for Nanotechnology in Virginia, INanoVO for short. We are a
    coalition of State Government, leading research universities,
    and a growing family of nanobusinesses all across the
    Commonwealth. A list of our members and stakeholders is
    attached in the written version of this testimony.
        Our organization has the goal to position Virginia among
    the national leaders in nanotechnology research and business
    development, as we are keenly aware that leadership in this key
    technology is a key to our economic future. In our short
    history in this field, we have seen great enthusiasm amongst
    different institutions in Virginia, different labs and
    different universities, including businesses, and we urge the
    passage of the 21st Century Nanotechnology Research and
    Development Act, as in the draft bill.
        In my remarks this afternoon, I wish to sketch some general
    arguments in favor of this bill, and touch briefly on
    Virginia's perspective, which we believe will be shared by
    numerous regions across the Nation, and conclude with two
    recommendations that we believe will strengthen the impact of
    this legislation.
        First, some comments. The rest of the panel have talked
    about scientific and business aspects of nanotechnology. I will
    extend it to its social implications and also its regional
    implications. First, we must recognize that our entire economy
    has become heavily dependent on technological innovation. Some
    economists estimate that nearly half of the American economy is
    now driven by new scientific discoveries in the technology-
    heavy sectors, ranging from agriculture and medicine, to man-
    made materials, electronics, information technology, and
    telecommunications.
        We now know that further development in these and other
    industries will be driven in large part by a broad general
    movement that we have come to know as nanotechnology. So it is
    inevitable that we view nanotechnology, which in its simplest
    definition is a natural outgrowth of our ability to work with
    ever-greater precision in ever-smaller dimensions, as the
    foundation upon which we will enter this new age of innovation.
        Some may ask, why do we need this bill? If nanotechnology
    is so promising, why cannot private enterprise foot the bill?
    The answer, quite simply, is this. We owe our leadership in
    high technology to the Government's timely investments in
    critical early stages, time and again, when emerging
    technologies were most in need of a boost in order to move
    toward eventual commercial success. From the dawn of modern
    agriculture, to aerospace, to the launching of the information
    age, Government support has been a powerful catalyst to drive
    basic research and accelerate technology transfer from the
    laboratory to the marketplace.
        To those who ask, why pass this bill, we can respond to
    another question. What will happen if we do not? The answer is
    disconcerting. As we see other Governments of the European
    Union and East Asian nations investing heavily in long-term
    major nanotechnology research and development centers, the hard
    reality is the worldwide race for preeminence in nanotechnology
    is on, and America must push to stay ahead.
        From Virginia's perspective, we see great promise for
    nanotechnology to boost business and industries that are
    crucial to our own overall economy, which include information
    technology, biotechnology, advanced materials, health care, et
    cetera. We have an impressive infrastructure in the State, with
    leading research universities, a lively venture capital
    community, and a business-friendly State government. For all
    our strengths, however, we are not yet at the point of critical
    mass. We have not yet created the synergies necessary to form
    leading nanotechnology research and development centers such as
    those currently under development in several other States.
        I believe this will be the case with numerous regional
    areas where nanotechnology is carried out, and so we believe
    that this bill will be a catalyzing force to encourage
    nanotechnology research and education in Virginia, as in
    industrial regions of the Nation, to foster development of
    major public-private partnerships and to actively engage larger
    segments of our business communities and academic communities
    in nanotechnology movement.
        Regarding the bill itself, we have two major
    recommendations that we believe will enhance its effectiveness.
    First, we judge that the pace of nanotechnology research will
    be accelerated considerably if the bill were to encourage the
    development of regional centers for excellence in research
    instrumentation which encompass both multidisciplinary
    facilities and state of the art infrastructure.
        All scientific disciplines are engaged in nanoscale
    research, and much of this work requires sophisticated and
    expensive equipment. If this bill were to encourage the
    formation of regional networks of such research equipment, then
    access would be enhanced. We would anticipate more efficient
    utilization of equipment, a much broader participation of
    researchers from colleges and universities of all sizes, and a
    faster spread of the scientific, technological, and educational
    benefits of nanotechnology.
        Second, we believe the bill should specifically require
    coordination between the National Nanotechnology Coordination
    Office and existing State nanotechnology initiatives, as well
    as university research offices. This decentralized approach is
    particularly necessary for nanoscale sciences, where much of
    the fundamental innovations will occur, or have been occurring
    in a bottom-up fashion.
        One method to accomplish this is for the national office to
    directly fund State initiatives and charge them with the task
    of identifying and encouraging specific lines of research and
    business development based on identified strengths in their
    particular regions.
        In conclusion, the Initiative for Nanotechnology in
    Virginia strongly supports the proposed bill and envisions it
    as a much-needed catalyst to help the Nation and regional
    centers realize their ultimate potential for scientific,
    technological, educational innovations through the enabling
    science of nanotechnology.
        Finally, I would like to thank the committee Chairman and
    Senator Allen for inviting us to speak at this forum, and I
    gladly offer the services of our organization to help the swift
    passage of this bill.
        Thank you.
        [The prepared statement of Dr. Swami follows:]

         Prepared Statement of Nathan Swami, Director, Initiative for
        Nanotechnology, Commonwealth of Virginia, and Microelectronics
                    Program Director, University of Virginia

        Good afternoon. My name is Nathan Swami, and I am Executive
    Director of the Initiative for Nanotechnology in Virginia, or INanoVA
    for short. We are a coalition of state government, leading research
    universities, and a growing family of nanobusinesses that are emerging
    throughout the Commonwealth of VA. A list of our members and
    stakeholders is appended to the written version of my testimony.
    INanoVA's overall goal is to position Virginia among the national
    leaders in nanotechnology research and business development, as we are
    keenly aware that leadership in this exciting field is the key to
    Virginia's economic future. In our short history, we have found a
    rising tide of interest in nanotechnology, and it is with great
    enthusiasm that we urge passage of the ``21st Century Nanotechnology
    Research and Development Act.''
        In my remarks this morning (afternoon), I wish to sketch out some
    general arguments in favor of this bill, touch briefly on Virginia's
    perspective, and conclude with two recommendations that we believe will
    strengthen the impact of this important legislation.
        First, we must recognize that our entire economy has become heavily
    dependent on technological innovation. Some economists estimate that
    nearly half of the American economy is now driven by new discoveries in
    technology-heavy sectors ranging from agriculture and medicine to man-
    made materials, electronics, information technology, and
    telecommunications. We now know that further developments in these and
    other industries will be driven in large part by the broad general
    movement known as nanotechnology. So it is inevitable that we view
    nanotechnology, which in its simplest definition is the natural
    outgrowth of our ability to work with greater and greater precision in
    ever smaller dimensions, as the foundation upon which we will enter a
    new age of innovation. This new age, the Age of Nanotechnology, is one
    where we will imitate nature itself, thus endowing us with the
    capability to make materials, devices, machines and medicines with an
    efficiency and effectiveness that is undreamt of today. We are on the
    cusp of that new age now, and government support can assure that we
    will get there first.
        Some may ask, ``But why do we need this bill? If nanotechnology is
    so promising, why can't private enterprise foot the bill?'' The answer
    quite simply is this: We owe our world leadership in high technology to
    the government's timely investments at critical early stages, time and
    again, when emerging technologies were most in need of a boost in order
    to move toward eventual commercial success. From the dawn of modern
    agriculture to aerospace to the launching of the Information Age,
    government support has been a powerful catalyst to drive basic research
    and accelerate technology transfer from the laboratory to the
    marketplace. In industry after industry, one sees the same pattern:
    federal dollars encourage early discoveries in a new technology, which
    then attracts private investment, which then grows into a successful
    industry, with large employers and many jobs for working Americans.
    Trace the history of agribusiness and the green revolution and you find
    federal dollars funneled through Agricultural Extension services in our
    land grant universities, an ongoing investment that has revolutionized
    American farming. Silicon Valley and Boston's Route 128 high tech
    corridor would not exist if the Federal Government had not invested in
    early stage research in computer science. The Internet itself is an
    outgrowth of federally supported research. We are now at another
    critical juncture in our technological evolution, and timely passage of
    this bill will go far to assure continuing American leadership in the
    global economy.
        To those who ask, ``Why pass this bill?,'' we can respond with
    another question: ``What will happen if we don't?'' The answer is
    discomforting, as we see other governments of the European Union and
    East Asian nations investing heavily in major nanotechnology research
    and development centers. The hard reality is that the worldwide race
    for preeminence in nanotechnology is on, and America must push to stay
    in the lead.
        From Virginia's perspective, we see great promise for
    nanotechnology to boost business development in industries that are
    crucial to our overall economy: information technology, biotechnology,
    advanced materials, health-care, aerospace, shipbuilding, and
    telecommunications, to name just a few. We have an impressive
    infrastructure in this state, with leading research universities, a
    lively venture capital community, and a business-friendly state
    government. Indeed, INanoVA owes its very existence to timely funding
    from Virginia's Center for Innovative Technology, an economic
    development agency focused on innovative technologies with an
    impressive track record in facilitating the start up and growth of
    leading edge businesses. For all our strengths, however, we are not yet
    at the point of critical mass, and we have not created the synergies
    necessary to form leading nanotechnology R&D centers, such as those
    currently under development in several other states. This bill, we
    believe, will be a catalyzing force to encourage nanotechnology
    research and education in Virginia, to foster the development of major
    public/private partnerships, and to actively engage larger segments of
    our academic and business communities in the nanotechnology movement.
        Regarding the bill itself, we have two recommendations that we
    believe will enhance its effectiveness.
        First, we judge that the pace of nanotechnology research will be
    accelerated considerably if the bill were to encourage the development
    of regional centers for excellence in research instrumentation,
    encompassing both multi-disciplinary facilities and state-of-the-art
    infrastructure. All scientific disciplines are engaged in nanoscale
    research, and much of this work requires sophisticated and expensive
    equipment. If this bill were to encourage the formation of regional
    networks of such research equipment, then access would be enhanced. We
    would anticipate more efficient utilization of the equipment, a much
    broader participation of researchers from colleges and universities of
    all sizes, and a faster spread of scientific, technological, and
    educational benefits.
        Second, we believe the bill should specifically require
    coordination between the National Nanotechnology Coordination Office
    and existing state nanotechnology initiatives, as well as university
    research offices. This decentralized approach is particularly necessary
    for nanoscale sciences where much of the fundamental innovations occur
    in a ``bottom-up'' fashion. One method to accomplish this is for the
    national office to directly fund state nanotechnology initiatives and
    charge them with identifying and encouraging specific lines of research
    and business development based on identified strengths in their
    particular regions.
        In conclusion, the Initiative for Nanotechnology in Virginia
    strongly supports the proposed bill and envisions it as a much-needed
    catalyst to help the nation and regional centers realize their ultimate
    potential for scientific, technological, business and educational
    innovations, through the enabling science of nanotechnology.
        Finally I would like to thank the Committee for inviting me to
    speak, and I gladly offer the services of our organization (INanoVA) to
    help in the swift passage of this bill. Thank you.

        Senator Wyden. Dr. Swami, thank you. that is very helpful.
    All of you have been very good. Just a few questions from me on
    this round, and Senator Allen and I always go back and forth,
    and as I said, what I would really like to do is just see if we
    could engage in a discussion.
        I think it is fair to say, gentlemen, that the premise of
    this bill is that the National Nanotechnology Initiative is a
    sensible step for Government. I think it is a good step, a
    constructive step, and we are for it.
        We think we can do better. We think we can build on it. I
    think what would be helpful is if you would highlight for us
    what you think the strengths and limitations of the NNI are.
    We'll start with you Dr. Stupp because of your work with the
    Academy. That way we can get your sense of where we are without
    getting you into endorsing every part of our bill as it is
    written.
        Feel free, if you would choose to, to endorse every part of
    this legislation. But seriously, what I think we are more
    interested in is getting your sense of what the Government is
    doing well in this area, what areas the Government could do
    better in, and starting off our discussion in that kind of way.
        Dr. Stupp. Certainly, what the Government did well was
    create NNI. That was a great concept. I think the only way to
    ensure that nanotechnology proceeds to its ultimate potential
    here in the U.S. is to have some kind of national program in
    nanotechnology. I think what is being done very well is
    certainly the great interest that all Federal agencies have
    shown in this initiative. I think across the board all agencies
    recognize the importance of nanotechnology, and that it has
    been very reassuring for members of the scientific community.
        The limitations, of course, are along the lines of
    interagency partnerships, which we view as being key to the
    future of nanotechnology. A very important partnership, for
    example, is that of the NIH and the other agencies, because the
    only example of nanotechnology at work in its best expression
    is biology itself.
        Senator Wyden. What should be done in the biology area? I
    noted that in your testimony earlier. What would you like to
    see done in the biology area that isn't being done now?
        Dr. Stupp. I think I would like to see programs that are
    specifically targeted to this interface of biology, medicine,
    and the physical sciences in the nanocontext, programs that are
    started by or initiated by agencies such as NSF, working
    alongside the NIH.
        I think the NIH, for example, needs to invest a lot more
    money in nanotechnology than they are investing today, and the
    NSF on the other hand needs the funds to leverage those
    interactions with agencies such as the NIH.
        I think my community, you know, the scientific community is
    really screaming for initiatives that are at this interface.
    The NIH has been an organization that has had a very strong
    mission, and you cannot criticize that. Their mission is to
    look over the health of our Nation, but at this point we all
    recognize in the scientific community that many of the most
    exciting opportunities lie at this interface with biology, and
    the NIH does not have the background, perhaps, to deal with it,
    and the NSF does not have the funds, so we have I think a
    problem of resources. We have, on the other hand----
        Senator Wyden. But that is a serious problem, we have a mix
    of insufficient talent and insufficient funds in an area that
    has extraordinary potential.
        Dr. Stupp. We have great talent, and insufficient funds.
        Senator Wyden. Maybe I missed it. Did you not say at NIH
    there are people with the requisite expertise in the biology
    field, and at NSF there are the funds?
        Dr. Stupp. But, of course, I am referring to the NIH as an
    agency that funds research. I am not speaking about the
    community of scientists, but there is, if you talk to any young
    person, our brightest young people in American universities
    today that are interested in science, you will find a large
    majority of them are interested in biology, but not necessarily
    traditional biology. They would like to innovate in medicine,
    and they see the technology as an enabling tool to get there.
        Senator Wyden. Let us see if we can get from Mr.
    Modzelewski and Dr. Williams and Dr. Swami the pluses and
    minuses of the NNI.
        Mr. Modzelewski. The biggest plus was the actual awareness.
    It told so many people in the corporate world and other Nations
    that nanotechnology was real and was serious. Unfortunately,
    the negative side of that awareness was sort of the
    nanotechnology race that might be best compared to a space race
    that was set off among Governments, who are increasingly
    funding and are increasingly aware of what this means to their
    economies in the future.
        Other positive areas were the much-needed funds, the level
    of coordination, and a lot of groundbreaking research that I
    think was actually very visionary for a new program that looked
    into social aspects and implications, and economic aspects and
    implications of what was greatly a basic research program, so
    it was quite innovative.
        We see some negative, not so much negative comments, but
    where there is a jumping off point to go a little further is
    probably look at research and development for
    commercialization. Again, things like scaling issues, it is one
    thing to make a very small amount of something on basically a
    small piece of glass in a laboratory, it is another thing to
    scale it up to production levels that industry could use. That
    is something in particular that many of the Asian competitive
    Nations such as Japan and Korea are very good at.
        Another area to look at is the integration of private
    sector, all the more so into the NNI, and ensure that on things
    such an advisory panel, that industry is strongly represented,
    so that much of the research direction does go to the future of
    the economy, not that we would like to take out a lot of wild-
    haired ideas that are some of the foundations of great
    scientific discovery. But to know that there is a level of
    looking towards the commercialization of these technologies I
    think would be very important to any further direction.
        And then I think there are a couple of issues that you
    could look at that are problematic across emerging
    technologies, and I think that would be things like the
    technology transfer system in the United States. It has
    certainly been improving at the Government level, but it still
    by most standards would be considered lacking at the
    universities, and still at a corporate level, when compared to
    other commercial operations, so to speak, and also the fear of
    a lot of patent issues, with the Patent Office being properly
    trained to understand this multidisciplinary structure, in
    granting patents that are too wide or too small, and also very
    timely and accurately approving patents.
        Senator Wyden. Dr. Williams.
        Dr. Williams. I will have to second most of that. I think
    the primary issue that NNI did was give the field legitimacy.
    At that point in time it was viewed primarily as fiction, and
    it was often very difficult for people who were working in the
    area to be taken seriously, or to get grants funded when they
    submitted proposals.
        Also, I think one thing that NNI did wonderfully was accept
    responsibility for ethical issues. Very early on, we were
    looking at the societal impacts and issues, trying to make sure
    that we did not have any nasty surprises that would come along
    and blindside the people working in this area. There was good
    communication about both the good, the benefits, and the
    potential downsides of nanotechnology and how they could be
    dealt with.
        It is also true that the creation of the United States NNI
    has seeded tremendous competition worldwide. As soon as we had
    an NNI, the world had an NNI. In fact, Japan makes absolutely
    sure that whatever we do in this country, they do at least as
    much, because their fiscal year follows ours by about 5 months.
    Whatever the United States enacts, they do the same or more,
    and that can also be said of the European Union.
        So as I mentioned in my remarks, I think the only way we
    can deal with global competition is to leverage all of the
    assets we have available in this country: the academic research
    community, our national labs and our corporate labs. I think
    the problem we have right now is that what few interactions
    existed are dramatically falling apart.
        I see these communities essentially turning their backs on
    each other and just walking away. I myself have just given up
    hope of negotiating with universities anymore to get engaged in
    joint research ventures. It is just too painful. I think we
    really need to have, as a part of a national nanotechnology
    program, means for bringing these communities back together and
    conflict resolution among these communities. Perhaps even an
    explanation of what the heck Bayh-Dole actually means, and what
    it was intended to do, rather than the very, shall we say,
    aggressive types of actions that we see taking place whenever
    we try to negotiate with the university now.
        Senator Wyden. We'll talk a little bit more about Bayh-Dole
    in a minute or two. Dr. Swami.
        Dr. Swami. Yes, briefly, I think a major strength, as has
    been stated in the past, has been increasing the visibility and
    the legitimacy of nanotechnology, no doubt about that.
        Another strength, although it has been also pointed out as
    a drawback, by Dr. Stupp, is getting organizations to work
    together. Yes, there is no doubt that there is a limitation in
    that, but to me it is also a major strength that agencies as
    diverse as the EPA were brought into, with the NSF, all to work
    together on nanotechnology. Five years, seven years ago I would
    never have thought this would have happened.
        Major limitations from the point of view of at least a
    regional center is, there are just too few large center
    opportunities, and since these are too few they end up being
    extremely competitive, fighting for a certain small amount of
    funds for a small amount of time, with a large number of
    competitors, and so I think the programs of the NSET and the
    interdisciplinary research programs that NSF has should be
    expanded to basically allow longer term research.
        Second is research infrastructure has not been directly
    addressed. There is a lot of good infrastructure available to
    some centers which are near national labs, or which work with
    those national labs, but otherwise universities have to build
    this infrastructure, and then have the industry come and work
    with the universities at these, the infrastructure, and I think
    the infrastructure should be addressed in some form, for
    nanotechnology especially.
        And finally, coordination of agencies, which many people
    have pointed out as a limitation, I would take that a step
    further. It is not just coordination of agencies for actual
    research done, but coordination of what happens with that
    research, who is doing what, coordination at the State and at
    the regional levels. That would be a limitation I think that
    could be acted upon.
        Thank you.
        Senator Wyden. Okay. Senator Allen.
        Senator Allen. Thank you, Mr. Chairman. Thank you all for
    your insightful testimony here, and answering questions. Let me
    ask Hon. Richard Russell a question. Listening to all of these
    concerns, I am going to follow up on some of them with him, but
    does the Administration have any target plans to aid in
    technology transfer and the commercialization of
    nanotechnologies?
        It has been said through a variety of ways, and I do want
    to follow up on why it is so hard to work with universities for
    the private sector and so forth, but do you have any target
    areas to get through some of these problems? Much of which is
    saying, get it into commercialization like some of the examples
    we have, and that will obviously pay for some of the research
    in the future.
        Mr. Russell. Let me break that into two pieces. I think
    part of what NNI has been trying to do is push the envelope,
    and push technologies out, and if you look at the grand
    challenges under the NNI programs that currently exist, and
    look at things like nanoscale manufacturing, this is clearly an
    effort to push nanotechnology into, not just manufacturing, but
    into the economy. The second issue revolves around generically
    the concept of how we push tech transfer, and I think that with
    nanotechnology, as with all research we do with the Federal
    Government that we try to get commercialized, I think the very
    same issues that are revolving around nanotechnology are also
    relevant across the board, and so we wanted to promote things
    like CRADAs, we want to promote--
        Senator Allen. Like what?
        Mr. Russell. CRADAs, corporate research and development
    agreements. We want to promote the use of the existing legal
    framework. Bayh-Dole was mentioned, and obviously there are
    issues between universities and industry, because really it is
    a win-win when you look at the universities and you look at
    industry. It is in both their interests to get this technology
    out. Industry obviously gains, the economy obviously gains, as
    does the university, and so where there are breakdowns in terms
    of nanotechnology I think there are probably the exact same
    issues we see across the board for all technology issues.
        Senator Allen. Let me follow up, then, with the rest of the
    panel here. Thanks for your comments.
        Some have alluded to the space race, and so forth, of the
    1960s, and we have heard about how the Japanese and obviously
    Taiwan, Korea, and the European countries are all wanting to
    emulate or do more than we are. We hear the same things in
    aeronautics research. There are a lot of similarities in here.
        The one thing that has been a thread through here, though,
    and especially from Dr. Williams and Hewlett-Packard's
    comments, as well as Mr. Modzelewski's comments, is the
    scientific research here, as far as the collaboration which is
    necessary with the private sector and universities and the
    Government, everyone collaborating, rather than having the
    Federal Government kind of as a mediator, and maybe it has to
    be.
        Why are intellectual property laws--in some cases, I have
    heard you say that is harming us, and how is that different
    from the intellectual property laws in other countries, whether
    it is Japan or whether it is Europe? And if anyone of you all--
    and maybe, Dr. Williams, I would ask you to do this, since you
    say you do not want to bother working with universities and
    colleges, that Hewlett-Packard, it is just too much of a
    nightmare, it is too difficult.
        These sorts of things, such as our patent laws, our
    intellectual property laws, and whatever other laws there may
    be at the Federal level that are harming cooperation with the
    private sector and universities, all are just fundamental
    problems that need to be addressed. And to the extent we can we
    ought to fix it so that people will have that collaboration,
    and make those investments, and obviously help the universities
    as far as their education, but ultimately, of course, benefit
    the competitive leadership role of our country.
        So Dr. Williams, if you could start off, and any of you all
    who want to lend some commentary to that, I would appreciate
    hearing it.
        Dr. Williams. I think the problem is not that the
    legislation is not good. I have now read the Bayh-Dole Act so
    many times I think I have actually memorized significant
    portions of it, and as I read it, it is a very fine act.
    However that is as I interpret it, and what we find is that
    people at universities interpret the same act, the same words
    in an entirely different fashion.
        Senator Allen. For purposes of the record, would you share
    with us what your view is of the purpose of the Bayh-Dole Act?
    And how is it being misinterpreted?
        Dr. Williams. My view of the Bayh-Dole Act is that it is a
    vehicle by which universities should be able to license
    intellectual property that they create in order to generate an
    economic benefit to the universities, and reward them for
    having created intellectual property. And in a sense to repay
    the investment that the public has made into performing
    research in generating an income stream for the universities.
    From that standpoint I believe that that is a very excellent
    idea. What it does is, it made universities more aware that
    intellectual property was important, and that it was an asset
    that they should take seriously.
        I would say that from a large corporation point of view the
    problem comes down to the interpretation of just a few very
    simple sentences in the Bayh-Dole Act, which state that in the
    case of commercialization opportunities, small companies should
    be preferred over large companies. And there's also another
    sweet little sentence in there that says, if a company provides
    some funding to a research program, the university ``may'' give
    a license for that work to the company that provides the
    funding.
        A large company reads that and says, okay, I give money to
    Professor X, whatever Professor X does, I own that. The
    university says, no, we actually have to prefer small
    companies, so you give money to Professor X, we, the university
    owns it. And by the way, when it comes time to license it, we
    are going to license it to a small company, and it is going to
    be very likely that that small company actually was created by
    Professor X.
        So large companies have been burned many times by giving
    money for research to universities, only to find that they had
    absolutely no rights to the intellectual property that was
    created at all, and the intellectual property winds up being
    put in the hands of a small startup company which actually has
    the principals of the startup company being the professors who
    got the research funding. There's a fairness issue there, and
    enough large companies have been burned enough times by this
    type of thing happening that most of the people I have talked
    with at large companies say, forget it, we are just not going
    to go there anymore. This is the end.
        But in fact there is a reasonable decent and fair middle
    ground. The thing that the University interpretation of the
    Bayh-Dole Act does not really recognize is that there is a
    difference between an exclusive and a nonexclusive license,
    that if a company gives money to a professor to do research, of
    course it is totally unfair for the company to claim ownership
    to all of that research because they are not paying for the
    infrastructure that has been paid for by State and Federal
    funds and everything else that goes on. But on the other hand,
    it is possible to grant a nonexclusive license, in other words
    a license that recognizes a sharing of that intellectual
    property, the fact that the company provided money, and also
    often provides intellectual input to help to create those ideas
    as well.
        So I think there is a meaningful middle ground. What has
    happened is that the discussion between most large companies
    and universities has become so strident that they become
    polarized and refuse to even acknowledge that there is a middle
    ground available to them, and what is happening is that they
    are growing further and further apart. And for my own part, I
    find it is far easier to me to start up a research
    collaboration with a university in Russia, or China, or France,
    than it is with a university, shall we say, just a few miles
    from where I am located.
        Senator Allen. Thank you, Dr. Williams. Dr. Stupp.
        Dr. Stupp. As Professor X, I guess I have to say something.
    right?
        [Laughter.]
        Senator Allen. This is a great concern, that it is easier
    for a company to deal with it especially in another country.
        Dr. Stupp. I just wanted to say for the record that even
    though I agree with many of the things that my colleague Mr.
    Williams said, I think for the most part universities are
    careful, usually, to grant exclusive or nonexclusive licenses
    to those companies that funded the research. I think, I am sure
    there are exceptions. There may be different trends on the West
    Coast versus the East Coast or the Midwest, but I think if you
    look at the problem specifically, usually the universities are
    careful to do that.
        The issue of a nonexclusive license, I agree with what Stan
    said, and yet the problem is that sometimes we receive, you
    know, $50,000 for 1 year of research from a company, often
    times a large company, and we are always very eager to please
    the company and show good results, so that you end up spending
    a lot more than $50,000 to achieve the goals. And so in that
    case, of course, a nonexclusive license is perfectly
    reasonable, and that is the way it should be done.
        But just for the record, I think that if one wants to
    assess if this is a real problem, you really have to look at
    the statistics. There are too many universities in this
    country, and many of them are extremely careful, I would say,
    about matching one-to-one, and funds versus licensing.
        Senator Allen. Well, Mr. Modzelewski, from your
    association, which obviously has a multitude of folks, you are
    looking for capital in your alliance, as far as your
    nanobusinesses, what do they say about this? We have two
    slightly different points here.
        Mr. Modzelewski. I think actually, picking off of something
    you just said, it is that careful nature. They are so careful
    that nothing gets transferred out. There tends to be, there are
    very few operations. I have heard less than a dozen among all
    the thousands of universities in America that are actually
    profitable on a tech transfer standpoint. Something like 6, I
    think, were last year, and one of the reasons for this is that
    nothing gets transferred out. The negotiations tend to be quite
    aggressive and quite onerous. The amount, the percentage that
    the university asks for tends to be very high.
        This is--looking at the psychology, I mean, not being a
    psychologist myself, but looking into some of it, you tend to
    see from conversations with tech transfer people that they are
    all trying to hit a home run. They are all looking for the next
    Gatorade, or the next giant biotech revolutionary discovery
    that will bring in millions if not billions to the university,
    so in light of that they tend to negotiate so tough that
    nothing gets out.
        They tend to look for such a big percentage just in case
    something hits, and that they are not held responsible for only
    getting 10 percent of a multibillion dollar drug discovery,
    that instead they just put the brakes on everything. And it
    does include, certainly, the corporations, but also the
    startups. There are many entrepreneurial professors at
    universities that try to take their discoveries off, and just
    cannot, or the fight is so long they say, I am really
    considering leaving my university.
        I have had professors say, I would rather go to one of the
    ones that is working, or get out of here and give up my past
    portfolio, just cede it to the university, rather than sit here
    and just not be able to get anything done. They want to be
    entrepreneurs, they want to get things out, but the negotiation
    process generally just ties them up so badly.
        Continuing along the same lines, there is also just issues
    with taking intellectual property and making it something that
    is global. The cost of registering patents in the U.S. is
    actually very cost-effective, and our processes really should
    be the envy of the world, but when you try to take a simple
    discovery that is here in the United States and get global
    protection, you are talking about more than a $100,000 process
    with legal fees and registration fees, and that is an
    incredible burden that most universities, unless award after
    award is being given to the research that was discovered, are
    willing to extend to the professor. And so that is another
    point that once you get to that global level, you start having
    some real difficulties and hit the wall.
        Senator Allen. Well, some of those are similar to business
    decisions, regardless of whether it is a university and having
    to register it.
        Mr. Modzelewski. They cannot be blamed for that. If every
    professor who discovered something wanted a global patent, I
    think the university certainly does need to make that business
    decision. Nevertheless, you are entering an area of where might
    there be some easement of that sort of pain on a researcher,
    and where might there be programs, whether they be loan
    programs, or something along those lines, that might be able to
    help this bottleneck, the ability to get global protections.
        Senator Allen. If I may, Mr. Chairman, can I follow up on
    this line of concern?
        Senator Wyden. Of course.
        Senator Allen. In listening to the three of you all on
    this, there is maybe three different perspectives. Let us
    assume that some universities are more easy to deal with than
    others, some are very picky and very restrictive. Apparently,
    Hewlett-Packard has not found those that are better.
        In listening to you, obviously the Nanobusiness Alliance,
    their view is that some are better than others. Could it be the
    case, or could it occur that those universities that are, let
    us say, more willing to strike a reasonable deal and a
    partnership with the private sector working with their
    professors, students and so forth, would those not then be one
    of the more attractive universities, or are they commonly
    known?
        And I do not ask you to start listing names here, but if
    they were more commonly known, say the top 10 percent that have
    good business sense and are willing to take some of these risks
    and partner, would not more research go to those universities
    in the event that they have that reputation, so that it does
    not matter? Any company, Intel or Micron, would want to do
    that?
        Mr. Modzelewski. Yes. It almost becomes self-fulfilling.
    The ones who are very good at it are able to cut much easier
    terms, because they have so much flow that they know there will
    be something to receive on the other end. We have a lot of
    other universities, a few that they only have one shot. They
    swing for the fence on the ones they do get out. So you do see
    the schools that are well known in technology development, some
    of which are actually represented right here, being able to be
    much more fair in their negotiations than others, who are again
    just looking for that big hit that will change the university's
    dynamic.
        Senator Allen. Dr. Swami, have you found this in Virginia,
    since you have worked with a dozen universities?
        Dr. Swami. Yes. In Virginia we have the same paradigm with
    the big company and the small company, but clearly even small
    companies have had trouble getting these technologies on board
    because of negotiations with universities. Nevertheless, we
    still have had some success with at least about a handful of
    such technologies. Usually that has occurred when the
    professor, the entrepreneur, is entrepreneurial enough to take
    it to the next stage. If the professor has not been of that
    nature, then usually there is an even bigger stumbling block
    than anything else.
        Senator Allen. Dr. Stupp, do you have any closing comments
    on behalf of the universities?
        Dr. Stupp. I think one other thing one should add is that
    our experience with this process is still pretty young, and I
    would argue that maybe 5 years from now you will be able to
    make a better assessment, and this is a self-selecting process,
    I think. The universities who are really smart about dealing
    with technology transfer, eventually they will become
    attractive places, as you said, and people will gravitate to
    those, and those will be successful, I think.
        We do not have many decades of experience in tech transfer
    at universities, and so I think you just need to let things
    sort out.
        Senator Allen. Thank you, and thank you, Mr. Chairman, for
    letting me go a little longer.
        Senator Wyden. I thank my colleague, and I thank Dr.
    Williams. I have been trying to get everybody in this town to
    get interested in Bayh-Dole, because I think if people really
    understood what was at stake, we would do more than talk about
    this from time to time for a few minutes.
        The fact of the matter is, and we have considerable
    statistics on this, Dr. Stupp, we spend billions and billions
    of taxpayer dollars every year on the National Institutes of
    Health, energy laboratories, and environmental laboratories.
    Under the Bayh-Dole law, which is more than 20 years old, we
    are supposed to have a process for commercially transferring
    these fruits of the taxpayers' research treasure trove to the
    private sector, yet virtually nothing gets out.
        I have done a number of analyses of Bayh-Dole, and in my
    view, not only does the system not work for companies, it does
    not work for universities, and it does not work for taxpayers.
    We are at the point now where major agencies cannot even
    document where the tax dollars go with respect to key areas of
    investments with the universities and companies. Specifically
    at my instigation, the National Institutes of Health has sought
    to document Government investments in medicines, and they have
    not been able to do it. They literally do not know where all
    the investments are in promising medicines that the taxpayers
    have put up money for.
        We do have a sense that perhaps half of the breakthrough
    drugs can get to market with taxpayer money, but we do not know
    where all of those investments go, and NIH is just now trying
    to assemble such a database.
        And so I am going to leave this question of Bayh-Dole,
    other than asking Mr. Russell one question. We discussed this
    when you came to my office, when you were going to be
    confirmed. In light of the testimony today, our discussion, and
    other discussions I know you have had on Bayh-Dole, are you now
    convinced that it is time for an administration task force
    composed of university officials, of companies, and taxpayer
    advocates, to work together in a cooperative way to get more
    value out of taxpayer investments?
        What Dr. Williams has done is blow the whistle here. Thank
    goodness somebody did from the real world, because when people
    talk to me about it, they say it does not work for
    universities, it does not work for companies, and it sure does
    not work for taxpayers. The statistics are pitiful, beyond the
    paltry return and the fact that we do not know where the money
    goes.
        I have talked about this several times, and every time I
    do--Dr. Williams, I am going to be able to invoke your name--
    everybody heads for the ramparts. The universities worry that
    Ron Wyden is about to upset the apple cart. Western
    civilization is going to end, universities will not be able to
    do any more of the research, and all I have talked about is
    creating a winner for universities, companies and taxpayers.
        I want to leave Bayh-Dole after we get Mr. Russell's
    comments, but what I would like to hear from Mr. Russell is
    that you get the message. You understand how serious this is. I
    would like to know within 30 days, whether the administration
    is willing to work with universities, companies and taxpayer
    groups to take a look at this 22 year old law. I believe it was
    enacted in 1980, and it does not seem to work for anyone now. I
    think we ought to examine this on a cooperative basis, because
    after all this is not a question of somebody being corrupt or
    evil.
        [For example] a big part of Bayh-Dole did not even envisage
    the kind of health care applications that Senator Allen and I
    are so excited about. It did not even envisage what would
    happen with the tax law, where Bristol Myers Squibb made $1.6
    billion last year and virtually nothing was given back to the
    taxpayers. So I would like to see you all within the
    administration review this on a cooperative basis.
        Mr. Russell. As you indicated, you have raised this with me
    previously. We took it seriously at that time, as we continue
    to take it seriously. We did ask PCAST, the President's Council
    of Advisors on Science and Technology, which is made up of both
    university presidents and industry CEO's, to look at this
    issue.
        The initial reports that we have gotten back is that Bayh-
    Dole as a framework makes sense. I think some of the specific
    issues that have been raised here today, though, are
    interesting, and I think that we should look at those, I am
    more than happy to work with you and your staff on fleshing out
    some of these very specific issues, because clearly, we are
    talking about nanotechnology, the Federal Government is
    investing a lot of money in nanotechnology. It will be
    investing a lot of money in the future in nanotechnology.
        The universities are going to get a lot of that research
    money, and we do want to see that research passed through to
    the U.S. economy, so I am more than happy to work with you and
    your staff on the issue. I hate to commit to a task force. I
    will tell you that right up front.
        Senator Wyden. If you all want to try and reinvent the
    Bayh-Dole law through the prism of nanotechnology, that is fine
    with me, but what Dr. Williams just told us is that he is
    having so much trouble with this that he and his colleagues
    will traipse to Russia and around the world, rather than work
    with universities here. That is not a trifling kind of concern.
    That goes right to the heart of what I have been interested in
    trying to change.
        Mr. Russell. And I would say, as I think I started my
    comments off to Senator Allen, that I use nanotechnology as an
    example. I do not think this is a nanotechnology-exclusive
    issue. I think we have to be careful that when we talk about
    tech transfer we look at it broadly, and not based on any
    single emerging technology, because I think whatever lessons we
    learn from nanotechnology are going to be the same for other
    technologies as well.
        Senator Wyden. I am willing to look at it broadly. I have
    looked at it broadly, and I have looked at it in depth; I have
    even looked at the exclusivity matter, Dr. Williams. A few
    years ago, there was an exclusive deal between Scripps and
    Sandoz, and I basically busted that up, because it was totally
    contrary to the interests of the public, to the business
    community, and to this country.
        The Scripps-Sandoz deal would essentially have put an
    exclusive agreement together with respect to general scientific
    knowledge, and it would all have been lubricated with taxpayer
    money. We broke that up, and since then I have followed the
    issue. At a minimum, Mr. Russell, I would hope that the
    administration would use nanotechnology in a cooperative way
    with universities, companies, and with taxpayer groups to get
    some changes. I think we can do so much better, and I have
    tried to promote such a discussion for some time.
        Dr. Williams, I did not know you were going to discuss
    Bayh-Dole today, but I think you performed a great service by
    blowing the whistle on this.
        Dr. Stupp. Mr. Chairman, I wonder if you would allow me
    just one extra thing.
        Senator Wyden. Sure.
        Dr. Stupp. That when you speak about the enormous
    investment of taxpayers' money, and the billions of dollars,
    you should also recognize that this always needs to be a part
    of the equation if we are going to revisit the law and so
    forth, that we have, of course, we provide--I mean, the main
    function that we have is education, and we have invested--a lot
    of that taxpayer money actually goes into training a very
    technically competent workforce, perhaps the best in the world,
    possibly, and we use the investment from taxpayers' money to
    educate our people, and this is a very costly procedure.
        At the same time, large companies in the last 20 years have
    downsized their basic research efforts, and so there is now
    suddenly a much greater--you know, there is a spotlight on
    universities to take the burden of basic research and
    development, which is very difficult to do inside universities,
    because it is not compatible with education.
        Senator Wyden. I think that is a very fair comment, and
    there is no question that there are many beneficial
    ramifications of the work between companies and universities.
    Bayh-Dole's central premise is that when taxpayers support
    research, we are supposed to get breakthroughs out of the
    laboratory and turn it into innovations in the marketplace.
    Clearly this is an area where we must do better. If companies
    like Hewlett-Packard tell us that not only are we not doing it,
    but they are so frustrated at this point that they are going to
    go to the former Soviet Union, we have got a challenge on our
    hands.
        Dr. Stupp. Maybe you should come to the Midwest.
        Senator Wyden. Let us have those discussions. I thank my
    colleagues. I have additional questions. Would you like to ask
    any?
        Senator Allen. No, but I do want to thank you all for your
    very insightful testimony.
        Mr. Chairman, I am sorry, I have other meetings I have to
    get to.
        Senator Wyden. Thank you. Let us go specifically back to
    nanotechnology. Now that we have had this discussion on Bayh-
    Dole, I would like to hear about the health care applications
    of nanotechnology, and particularly what kind of nano-inspired
    health care applications look promising in the short term. What
    does the landscape look like further down the road? Would any
    of you like to start with that? Dr. Stupp.
        Dr. Stupp. Well, there are two technologies, I think, that
    are likely to be nano-inspired, that will have broad impact.
    One of them is targeted drug delivery. If you think about
    cancer, for example, we basically kill our patients with toxic
    drugs, and in the end the battle is lost, and a lot of these
    problems have to do with our ability to target medicines to the
    right locations of the body.
        I think the nanodesigns of drug couriers will definitely
    address this problem. Whether you see this as a short or a long
    term is not really clear, but nonetheless I think, I would
    prefer to think that it is not really long range, it is
    actually middle range.
        The other one is regenerative medicine, because that is an
    alternative to medicines. Why not use nanotechnology to
    regenerate parts of the heart, or to regenerate cartilage, or
    bone, or regenerate spinal cords so you can reverse paralysis,
    reverse blindness?
        What is needed there is, you have to design materials,
    which are typically referred to as scaffolds, that will give
    cells the right signals to regenerate normal tissue, and the
    only way we are going to be able to get that is to design
    materials at the nanoscale that can in some rational way
    interact with cells, so I would say regenerative medicine is
    one of those areas where nanotechnology has enormous potential,
    and it happens to be a wonderful example of something that
    biologists alone will not do, engineers alone will not do. This
    is going to have to be a team effort, and highly
    interdisciplinary effort, and a very important fruit of
    nanotechnology, basically repairing human beings, and this will
    eliminate the need for a lot of the medicines that we now take
    which are not very successful, probably shorten our life span.
        Senator Wyden. Others on the health care applications of
    nanoscience? Dr. Williams?
        Dr. Williams. I think an area that actually has potential
    for happening relatively soon is an entirely new means for
    diagnosis. Right now, of course, when you go to the doctor you
    give a little blood sample and it goes off to a lab, and it
    takes several days to come back, and then, of course, it is
    fairly nonspecific set of information that the doctor gets.
        With new technologies for being able to build entire
    laboratories on a chip, and within those laboratories, being
    able to build extremely sensitive nanoscale detectors which can
    be targeted at a wide range of vectors, if you will, for either
    external attack or some type of internal disease like cancer, a
    medical exam can essentially be performed immediately. You get
    results back in real time.
        I think that with the marriage of advanced information
    technology we also have the possibilities of creating in real
    time with the diagnosis a directly specific treatment for the
    particular patient who is coming to see the doctor, so I think
    that this whole area of diagnosis is going to change the way
    people interact with their doctors, and the way you have your
    physical exams, and that I think is the type of thing that
    literally can happen within a relatively short number of years,
    2, 3 years, some of these things can be up and ready to go if
    there is the will to actually do it.
        Senator Wyden. Dr. Swami, did you want to comment on
    health?
        Dr. Swami. My comments would probably follow on what Dr.
    Williams said. Basically, I would just extend it. Diagnostics
    is probably one specific application in the general field of
    sensors, because nanotechnology has the ability to sense
    extremely sensitive signals. Due to that, and due to the fact
    that it can be embedded very easily into products, sensors
    would be a field where you can see an immediate application, a
    platform where they could immediately or very soon work
    directly on the product development in that field.
        Mr. Modzelewski. One other area that is already happening
    right now and is already in trials from a company called C-60
    is actually using a Bucky ball as a protease inhibitor for the
    AIDS virus. As the AIDS virus tries to attach itself to a cell,
    you might almost consider it like an octopus trying to latch
    on, and what they basically are working on right now is
    actually using a Bucky ball to actually block it from attaching
    itself to the cell.
        It is not treating the HIV, so the HIV is not developing
    any mutations towards it, or going about it different ways. It
    is just thwarting it from doing its job, which is to attach
    itself and to replicate.
        Senator Wyden. Gentlemen, some are raising concerns about
    the ethics of nanotechnology and saying in effect the
    scientific developments are outpacing the focus on ethical
    concerns. I am curious whether you share that view and, if so,
    whether you have any recommendations for how it ought to be
    dealt with.
        Dr. Williams. Frankly, I think, and largely because of Mike
    Roco's leadership, the NNI has been almost unique in its focus
    on societal issues, and trying to elevate the awareness very
    early in the entire cycle, so yes, it is very, very true that
    right now our tools that we have are evolving much faster than
    we ourselves are.
        For millennia we have all very slowly worked with our
    tools, but now the tools are changing by orders of magnitude,
    well within the life span of any individual, so that is very
    difficult for us to deal with and adjust to, but in my own
    opinion the NNI provides the model that exists so far for being
    able to take into account these ethical and social issues in
    watching a science evolve into a technology and beyond.
        I think this is a first. I think it is the first time this
    has been done, so I am sure that the process can be improved.
    But I applaud Mike Roco and the others who have been involved
    in Examining ethical issues doing this, because it is
    imperative for people to be well educated in the tools that are
    going to be used in the society around them.
        Senator Wyden. Doctor.
        Dr. Stupp. I just would add, briefly, that our committee,
    our report very specifically talks about this in recommendation
    9, because we felt that even though there was the intention of
    the NNI to look into issues of societal implications, the
    reality is, it really has not happened to a great extent, and
    so we are recommending that the NNI implements a new strategy
    to make sure that those programs do take place.
        Senator Wyden. Gentlemen, in your view, what needs to be
    done to make sure that this country has a properly educated
    nanotechnology workforce? It is very clear that the educational
    aspects of this are going to be key, and we are going to have
    to look at this systematically, particularly at the
    universities. Why don't we take a minute or two to get your
    thoughts on what it is going to take for this country to have a
    properly educated workforce to really tap the potential in
    nanotechnology.
        Dr. Stupp, do you want to start with that, with the
    academy's views?
        Dr. Stupp. Definitely, the development of an
    interdisciplinary culture is key for nanotechnology
    development. I think that it would be fair to say that most
    universities have recognized that multidisciplinary research is
    important. However, it is not yet clear to a lot of
    investigators what interdisciplinary research really is.
        I mean, there is a difference between multidisciplinary and
    interdisciplinary. What we need most is interdisciplinary
    culture, meaning that individuals themselves are
    interdisciplinary, and this is a very challenging educational
    task, but in fact the NNI, and hopefully with the advice of
    some external board that includes members of the scientific
    community, as well as individuals with expertise in research
    management, will be able to impact directly on this goal by
    creating the right programs that will encourage this kind of
    interdisciplinary development among individuals. So
    interdisciplinary culture is key.
        I think we need to catalyze it through the NNI programs,
    and so somebody has to think hard about how to do that. The
    solutions are not there yet.
        Senator Wyden. Others? Mr. Modzelewski, particularly the
    private sector. I can think of an awful lot of public schools
    in Oregon where we are very excited about the prospects of
    nanotechnology, where we would like to see your companies make
    investments.
        Mr. Modzelewski. I think it starts there. I think it starts
    very early. I mean, I think we have to make a real effort not
    to just consider this as a college program, but to get kids
    interested in the physical sciences at a much younger age, and
    not just getting them interested. I think too much emphasis is
    put on, perhaps, an idealistic view that this excitement in
    science will just naturally be drawn within them.
        I think there needs to be other buttons pushed, and I think
    certainly financial incentives, and that the entrepreneurs of
    tomorrow might be--are the researchers of today is certainly
    something that should be underlined far more, that the
    companies of tomorrow in nanotechnology are the startups that
    are being started by researchers at university and corporate
    labs, and that they are going out to start these, and I think
    that level of incentive also being worked in is something that
    we need to accept as probably being part of the incentive
    package for young people to think of this as a career move.
        Right now, you are talking about a field that is greatly
    dominated at American universities by foreign students. You
    will find Chinese nationals in some cases being the entire
    program at a university, and at some of the startups the entire
    research team being Chinese nationals, who they know at one
    time or another are going to be recalled to their home country
    to do their work. So we really do need to think of this as an
    imperative how we incentivize, and I think mainly just getting
    the information out there as science is cool and exciting is
    one thing, and that is sort of a path we have taken, but I
    think also to point out that it is a great career move, and a
    very lucrative career, is something that will certainly attract
    young people.
        Senator Wyden. Any idea, of today's nanotechnology
    workforce in this country, how many are from other countries?
        Mr. Modzelewski. I would be giving a blind guess, but it is
    definitely more than half.
        Dr. Williams. I can give an observation. 17 out of the last
    18 people I have hired were born outside the United States, and
    half of those were educated outside the United States.
        Senator Wyden. Well, that sort of sums it up.
        Dr. Williams. Actually, if I may just make a comment along
    this line, to be real crude about it, money talks. If you look
    at what has happened over the course of the past decade, and
    track as I have the enrollments of American undergraduate
    students in various disciplines as a function of time, what has
    happened is that the enrollment of American undergraduates
    tracks almost exactly the investments in basic research.
        So over the past decade, NIH has actually been doing very
    well. Their budgets have been going up. The enrollments of
    American under graduate students in biology departments in the
    United States is skyrocketing. It is up over 55 percent in just
    the past few years.
        On the other hand, in mathematics, in physical sciences, in
    engineering, overall funding is down, and down significantly.
    Enrollment of American undergraduates in those programs is down
    20 to 30 percent over the past decade.
        I have asked young people what they want to do, and they
    always tell me, oh, I am going to go into biology. I ask then
    why. Well, that is where the action is. You know, from the
    standpoint of a young person looking at a career, you go to a
    college and you see where all the money is being spent on a
    college campus, it is being spent primarily in the biology
    departments because of the strength of the NIH, so of course,
    that is what draws them into it.
        I believe that by taking the steps that we have taken, by
    legitimizing nanotechnology and as long as we have the
    commitment to increase the funding and keep it going, we will
    see significant increases in students going into this area,
    because it is very exciting intellectually. There are
    tremendous careers associated with nanotechnology, but the
    interface, the only place where young people learn that is when
    they first show up on a college campus; especially
    disadvantaged young people, who are the ones who are most
    likely going into sciences, you might say they do not know any
    better, but it turns out to be a great opportunity for them.
    And so I think that the NNI, just in being what it is, and in
    focusing attention and putting money into it, is going to have
    a tremendous impact on them.
        Senator Wyden. Well, gentlemen, there are a couple of
    questions I am going to ask of you all in writing. One of them
    deals with some technical issues with respect to the employment
    picture. It is clear that this is a significant opportunity for
    new jobs. It is very important in my State. We have the highest
    unemployment rate in the country, and what I would like to do
    is get into some of the specific areas where you think the
    biggest sources of jobs are likely to be. We will submit that
    and a couple of other questions in writing.
        Let me leave you with this. The irony is that we did get
    into a significant area that I did not expect to talk about at
    all today, which is the Bayh-Dole law, because it is clear that
    cutting edge science and nanotechnology is something we are all
    particularly excited about. It means we have got to get it
    right with respect to the role for Government, the role for
    private sector, and the role for universities. As I think Mr.
    Modzelewski said, with respect to education, we need to start
    even earlier than the universities, and I think we have got
    that opportunity with nanotechnology. I think we have got an
    opportunity to get it right.
        The administration clearly is moving in the right
    direction. Mr. Russell is a good man, and we have worked with
    him in the past. The NNI is a very positive step, and that was
    clearly the consensus of all today. The purpose of the
    legislation Senator Allen and I have with Senator Lieberman,
    Senator Landrieu, and Senator Clinton introduced is to build on
    it.
        We can do a bit better, and you can be very sure we are
    going to work closely with the administration and all in this
    country who care so much about it. We hope as we adjourn
    today's hearing and leave with a great deal of excitement about
    the possibility of regenerative medicine, never having to buy a
    pair of khakis again, and all kinds of other excitement that we
    have heard about today, that we leave with the idea that if we
    work together and get it right, nanotechnology can serve as a
    model that we will be able to duplicate again and again when
    there are other exciting fields. There is certainly enough
    goodwill and commitment over on that side of the dais to do it,
    and we will match it with bipartisan support over here, and we
    thank all of you for your patience. You have been here a long
    time, and with that, the Subcommittee is adjourned.
        [Whereupon, at 4:25 p.m., the Subcommittee adjourned.]

                                A P P E N D I X

                Prepared Statement of Hon. Joseph I. Lieberman,
                         U.S. Senator from Connecticut

        Our nation has long prided itself on being the world's premier
    innovator of new ideas. Over the last two and a half centuries, the
    uniquely American willingness to experiment with novel concepts and to
    chart bold directions has placed us at the forefront of scientific and
    technological progress. Our ability to engage in scientific exploration
    and to marry research findings with the development of practical
    applications has, in turn, enabled us to set the benchmark on virtually
    every indicator of human progress, from longer lifespans, to higher
    standards of living, to unparalleled economic productivity.
        However, while past accomplishments may confer a present
    competitive advantage, it does not guarantee future success. We cannot
    afford to rest on our laurels in a world that is becoming increasingly
    characterized by the speed with which scientific paradigms shift and
    technological revolutions occur. In a global economy in which ideas and
    technology are the new currency, every new breakthrough represents an
    opportunity to claim--or, in our case, lose--global leadership.
        The emerging field of nanotechnology constitutes such an
    opportunity. It is not just any opportunity, however, but one whose
    magnitude and significance locates it on the scale of harnessing
    electricity, creating antibiotics, building computers, or wiring up the
    Internet. It is, in short, a new frontier in science and technology
    that has the potential to transform every aspect of our lives.
    Nanotechnology, in fact, may have even greater potential to affect the
    way we live since it has such broad prospective applications in so many
    different areas, from medicine, to electronics, to energy.
    Nanotechnology is what scientists and technologists often call an
    ``enabling'' technology--a tool that opens the door to new
    possibilities constrained only by physics and the limits of our
    imaginations.
        Yet, despite the enormous potential that nanotechnology offers, it
    is not an area in which we have assumed uncontested leadership. From an
    international perspective, the United States faces the danger of
    falling behind its Asian and European counterparts in supporting the
    pace of nanotechnological advancement. Other nations have grasped the
    fact that the first players to fully capitalize on the promise of
    nanotechnology have the potential to leapfrog in productivity and
    precipitate a reshuffling in the economic, and perhaps aspects of the
    military, pecking order. Accordingly, they have undertaken substantial
    efforts to invest in nanotechnology research, and to accelerate
    technology transfer and commercialization. While our nation certainly
    possesses the raw resources and talent to lead the world in developing
    this technology, it is also clear that a long-term focus and sustained
    commitment, as well as new collaborations between government, academia,
    and industry, will be needed to ensure our place at the head of the
    next wave of innovation.
        In recognition of the need to support ongoing nanotechnology
    efforts and to spur new ones, I am pleased to join Senator Ron Wyden in
    cosponsoring today the ``21st Century Nanotechnology Research and
    Development Act.'' This Act will build on the efforts of the National
    Nanotechnology Initiative (NNI), which was started under President
    Clinton and has received continued support under President Bush, to
    establish a comprehensive, intelligently coordinated program for
    addressing the full spectrum of challenges confronting a successful
    national science and technology effort, including those related to
    funding, coordination, infrastructure development, technology
    transition, and social issues.
        I feel it is appropriate at this point to give credit to President
    Clinton for having the prescience and initiative of creating the NNI,
    and to applaud President Bush for expanding support for nanotechnology
    R&D from $270 million in FY 2000 to the $710 million targeted in his
    budget request for FY 2003. The NNI has been a key driver of
    nanotechnology in this country by bringing coherence and organization
    to what had previously been a scattered set of research programs within
    the Federal Government. It has, in no small part through the efforts of
    its spokespersons, Dr. Mike Roco and Dr. Jim Murday, achieved a higher
    profile for nanotechnology both within and outside the government, and
    brought the importance of this field into the national consciousness.
        The time is now ripe to elevate the U.S. nanotechnology effort
    beyond the level of an Executive initiative. Funding for nanotechnology
    will soon reach $1 billion a year, and the NNI currently attempts to
    coordinate programs across a wide range of federal agencies and
    departments. This level of funding and the coordination challenges that
    arise with so many diverse participants strongly recommend having a
    program based in statute, provided with greater support and
    coordination mechanisms, afforded a higher profile, and subjected to
    constructive Congressional oversight and support.
        Our bill closely tracks the recommendations of the National
    Research Council (NRC), which completed a thorough review of the NNI
    this past June. The NRC report stated how impressed the reviewers were
    with the leadership and multi-agency involvement of the NNI.
    Specifically, it commended the Nanoscale Science, Engineering, and
    Technology (NSET) subcommittee, which is the primary coordinating
    mechanism of the NNI, as playing a key role in establishing research
    priorities, identifying Grand Challenges, and involving the U.S.
    scientific community in the NNI. To catalyze the NNI into becoming even
    more effective, the NRC made a number of recommendations. These
    recommendations have largely been incorporated into our bill, including
    establishing an independent advisory panel; emphasizing long-term
    goals; striking a balance between long-term and short-term research;
    supporting the development of research facilities, equipment, and
    instrumentation; creating special funding to support research that
    falls in the breach between agency missions and programs; promoting
    interdisciplinary research and research groups; facilitating technology
    transition and outreach to industry; conducting studies on the societal
    implications of nanotechnology, including those related to ethical,
    educational, legal, and workforce issues; and the development of
    metrics for measuring progress toward program goals. This legislation
    will also complement the provision that I authored in this year's
    Senate defense authorization bill, S. 2514, establishing a
    nanotechnology research and development program in the Department of
    Defense. If this provision is supported in conference, we will have
    matching pieces of legislation that will encompass and coordinate both
    civilian and defense nanotechnology programs, establishing a truly
    nationwide effort that leverages the expertise residing in every corner
    of our government.
        If history teaches us anything, it is that once the wheels of
    innovation have stopped and stagnation has set in, mediocrity will soon
    follow. Nowhere in the world are those wheels of innovation spinning
    more rapidly than in the realm of nanotechnology. This legislation
    provides a strong foundation and comprehensive framework that elicits
    contributions from all three sectors of our society in pushing
    nanotechnology research and development to the next level. I look
    forward to supporting Senator Wyden in getting this important bill
    through the Congress, and hope that we may all work together in a
    bipartisan fashion to set the stage for U.S. economic growth over the
    next century.
                                     ______

         Response to Written Questions Submitted by Hon. Ron Wyden to
                              Hon. Richard Russell

    Bayh-Dole Act
        We heard from Dr. Stan Williams of HP and others at the September
    17 hearing that the Bayh-Dole Act and the way that universities deal
    with intellectual property is a major barrier to university-industry
    collaboration. In fact, Dr. Williams noted that it is easier to work
    out a partnership with foreign universities than with U.S. academic
    institutions. While the promise of Bayh-Dole is to get research off the
    shelf and commercialized, the reality of Bayh-Dole is that industry and
    academia often view the process differently and we get few useful
    results.
        Question 1. As you know, I am of the opinion that the Bayh-Dole law
    isn't working for any of its constituents--universities, industry,
    government, or taxpayers. How can we fix Bayh-Dole? Would OSTP or
    another appropriate agency be willing to lead an Administration task
    force made up of university people, companies, taxpayer advocates, and
    other interested parties that would work in a cooperative way to reform
    Bayh-Dole?
        Answer. The President's Council of Advisors on Science and
    Technology (PCAST) has created a Panel on Federal Investment in
    Research and Development and its National Benefit. The panel has been
    charged with two goals:

            1.  To review the R&D portfolio to determine areas where
            programs should be expanded, curtailed and maintained; and

            2.  To give advice on technology transfer mechanisms that will
            encourage commercial development to ensure maximum benefit for
            research funding.

        With respect to the second goal, one of the Panel's primary
    interests is the Bayh-Dole Act. The PCAST Panel is seeking perspectives
    on the Act from all parts of the science and technology community,
    including representatives from industry, academia, government labs, the
    venture capital community, and other interested parties.
        The Panel is working with these representatives to understand their
    viewpoints regarding whether the Bayh-Dole Act has been effective in
    promoting or catalyzing the transfer of technology from federally
    funded research to the private sector through licensing of patented
    intellectual property. Likewise, these representatives may also suggest
    to the PCAST Panel whether improvements to Bayh-Dole would involve the
    Act itself, or the manner in which the Act is interpreted or
    implemented. The Panel is hoping to include these perspectives on the
    Bayh-Dole Act in their larger analysis of technology transfer
    mechanisms that should be developed at the end of 2002.
        In addition, PCAST tentatively plans to hold an open forum on tech
    transfer in December to assist in soliciting a wide range of viewpoints
    on tech transfer programs including best practices under Bayh-Dole.
    Sufficient Government Support of Nanotechnology Research
        Question 2. Given that other countries are also investing
    significant amounts in this field, do you feel that we are doing enough
    to ensure our leadership in this field?
        Answer. The administration proposed a $679 million investment in
    nanotechnology for FY 2003, a 17 percent increase over FY 2002 funding
    levels. Taken together with past increases (FY 2002 levels were 25
    percent higher than FY 2001 levels, for example), nanotechnology
    represents one of the fastest-growing areas of federal research
    funding. The investment in nanotechnology also leverages the overall
    federal R&D investment, which reached unprecedented levels in the
    President's FY 2003 budget request. This overall investment helps
    support the research facilities and the higher education system that
    make the U.S. science and technology enterprise the world's best.
    However, while federal funding is important to maintaining U.S.
    leadership in nanotechnology, it is but one component underlying the
    strength of this field. For example, private sector innovation, and
    policies that support this innovation, are of critical importance as
    well.

        Question 3. The Administration has requested $1.1 billion for FY
    2003 for nanotechnology. We want to ensure that the efforts are well
    coordinated. How is that effort coordinated? How does its coordination
    compare with the coordination mechanisms for the Information Technology
    Research program? Does it make sense to bring in an advisory committee
    of outside experts to aid in the coordination?
        Answer. The Federal investment in nanotechnology is coordinated
    through the Nanoscale Science and Engineering Technology (NSET)
    subcommittee of the National Science and Technology Council (NSTC).
    NSET is currently chaired by a representative from NSF. Representatives
    from each agency participating in the NNI, as well as OSTP and OMB,
    attend regular meetings of the NSET and have a voice in coordinating
    the programs of the NNI. A National Nanotechnology Coordinating Office
    (NNCO) serves as a secretariat for the NNI, in a manner directly
    analogous to the function of the National Coordinating Office (NCO) for
    the Networking and Information Technology Research and Development
    (NITRD) program.
        Outside input on federal R&D issues is important, and Presidential
    advisory committees are one mechanism for gaining this input. However,
    formation and maintenance of a Presidential advisory committee comes at
    significant cost. Creating an advisory committee dedicated solely to
    advising on issues related to nanotechnology would necessarily draw
    funds away from the research and development activities of the NNI. The
    President's Council of Advisors on Science and Technology (PCAST) is an
    independent, external advisory body comprised of leaders from industry
    and academe who provide important extra-governmental input on R&D
    issues to the President and are clearly qualified to provide advice on
    issues related to nanotechnology. For this reason, drawing on an
    existing body such as PCAST represents a preferable means for gaining
    non-governmental, expert advice on nanotechnology without diverting
    funds away from research and development activities.

        Question 4. How are you tracking and measuring the success of
    nanotechnology research programs?
        Answer. Each agency that participates in the NNCO is responsible
    for reporting its accomplishments to the NNCO, which then assembles and
    includes these data in an annual report. Under the NNI, each agency
    invests in those R&D projects that support its own mission as well as
    the overarching NNI goals. While each agency consults with the NSET
    Subcommittee, the agency retains control over how resources are
    allocated against its proposed NNI plan. Each agency then uses its own
    methods for evaluating potential projects, and each assesses its NNI
    research activities according to its own Government Performance Review
    Act (GPRA) policies and procedures.

        Question 5. Your hearing testimony highlighted the economic
    potential of nanotechnology. Let me play devil's advocate for a
    moment--if nanotechnology is such a huge, revolutionary area, why
    should the Federal government invest here? Why can't companies bear
    this burden, if they are going to be positioned to reap the profits?
        Answer. The Federal government supports basic research and
    development across a broad range of disciplines that advance the
    frontiers of knowledge. Because the field of nanotechnology is still,
    in many ways, in its infancy, there is a clear need for fundamental
    research that answers the most basic questions regarding why materials
    behave differently when studied at the nanoscale instead of at more
    conventional scales. Understanding these questions will enable further
    research, including the type of research and development most important
    to industry. Given industry's focus on shorter term return on the
    research investment, the private sector simply will not fund the bulk
    of this type of long term, basic research. Thus there is a clear role
    for the Federal government in funding fundamental nanotechnology
    research, and this has been the priority of the NNI as a result.

        Question 6. What do you see as the biggest challenges nanoscience
    currently faces? In other words, what barriers could potentially keep
    nanotechnology from reaching its potential?
        Answer. The biggest challenges facing nanoscience include the
    development of new scientific instruments to enable precise
    measurements and manipulation at the nanoscale; the development of
    robust, reliable methods for fabricating reproducible structures; and
    the generation of sufficient numbers of scientists and engineers to
    make these advances. In addition, the societal impacts of
    nanotechnology must be addressed. Each of these issues represents an
    area of focus within the existing framework of the NNI.
    Multidisciplinary Education
        It appears that nanotechnology is an interdisciplinary science,
    combining facets of chemistry, materials science, computer science,
    biology, mechanical and electrical engineering, and physics.
        Question 7. How well prepared are our universities to produce the
    next generation scientists who have the requisite expertise in multiple
    disciplines in order to ensure that the United States continues to lead
    in nanotechnology research?
        Answer. Academic institutions are routinely engaged in reviews of
    existing curricula. How best to address the increasing need for
    scientists and engineers who can function at the intersection of
    multiple disciplines is a question many academic institutions are
    grappling with. One role of the Federal Government in this area is to
    fund the development of innovative educational programs aimed at
    helping to educate the next generation of scientists and engineers.
    Examples of federally-funded higher education programs related to
    nanotechnology include the following: Penn State used NNI funding to
    implement a new degree program in Nanofabrication Manufacturing
    Technology; NSF Integrative Graduate Education, Research and Training
    (IGERT) programs have funded a host of graduate projects on
    nanotechnology at a range of institutions; and NNI funding has
    supported education and training centers and networks at Columbia,
    Rice, Cornell, Harvard, Northwestern, and Rensselaer.

        Question 8. What needs to be done to promote a multidisciplinary
    curriculum at all levels, not just universities, so that we have a
    properly educated nanotechnology workforce?
        Answer. Decisions regarding the adoption of particular curricula at
    the K-12 level are best made by local entities. Federally-funded
    nanoscience-specific activities, including some funded through the NNI,
    are aimed at increasing the scientific and mathematics proficiency of
    the nation's K-12 students. For example, the NNI-sponsored activities
    mentioned above also have outreach functions that support K-12
    educational programs, and additional K-12 activities at Wisconsin,
    North Carolina, Arizona State, Rensselaer, the University of Tennessee,
    Rice and the University of Illinois at Chicago are funded through the
    NNI. In addition, the National Science Foundation and the Department of
    Education support the Mathematics and Science Partnerships program.
    This program, a key element of President Bush's No Child Left Behind
    education blueprint, supports partnerships between institutions of
    higher education and school districts in order to improve preK-12 math
    and science achievement for all students, to improve teacher training
    and professional development in these crucial subjects, and to improve
    the quality of math and science curricula. In addition, Federal
    sponsorship of research at universities, including activities mentioned
    in the previous answer, includes significant support of work that will
    result in a better educated and larger nanotechnology workforce.
                                     ______

          Response to Written Questions Submitted by Hon. Ron Wyden to
                              F. Mark Modzelewski
    Nanotechnology, Job Creation, Regional Centers
        Question 1. How many jobs do you anticipate the nanotechnology
    industry creating over the next ten years?
        Answer. This is a challenging question to answer as no formal
    studies currently exist. In fact, we urge the Congress to ensure that
    the U.S. Department of Labor undertakes a study of this question in FY
    2003.
        The difficulty in developing such a projection stems from the fact
    that nanotechnology is a platform technology--not unlike harnessed
    electricity, the internal combustion engine and the transistor. As a
    platform technology that will have a transformative impact on
    everything from the material sciences to life sciences to information
    technology and electronics means that in most cases nanotech will
    expand growth in these industries or reverse downward trends. It is
    expected that nanotechnology will become completely intertwined in
    current industries--before creating new ones.
        Nanotechnology employment growth trends will scale in much the same
    way biotechnology, the semiconductor industry, and the Internet sector
    developed; however, growth is reasonably expected to be sustained over
    a longer period of time as nanotech's reach is far greater. Current
    projections predict nanotechnology to represent a value of $1 trillion
    to the U.S. economy in value in little over a decade, it is safe to say
    that 10 percent-25 percent of all U.S. jobs in a decade will be
    directly related to nanotechnology.
        On a regional jobs development scale, we can look to history for
    job growth projections. For instance, Albany, NY recently became home
    to the next generation of SEMATECH--the semiconductor industry's
    development program. This project involves nanoscale semiconductor
    development and is part of the SUNY Albany NanoTech Center. Analysis by
    the State of New York strongly suggests that this $400 million project
    (together with the $400 million previously raised from corporate and
    state interests for the Albany NanoTech Center) will trigger economic
    development on par with Austin, TX's extraordinary growth initiated by
    the original SEMATECH project in 1988.
        Since arriving in Texas, SEMATECH has been responsible for
    attracting 11 percent of all jobs in the State--35 percent of
    manufacturing, 10 percent of service, 13 percent of trade, and 12
    percent of construction job growth. Austin-metro region unemployment
    rate is one-half that of the nation at large. Employment in the broad
    technology sector totals 125,000 and includes approximately 2,000
    firms, including:

       More than 200 semiconductor and semiconductor related
            companies located in the Austin area employing nearly 24,000
            people.

       Approximately 120 computer manufacturing and peripherals
            companies employ more than 43,000 people.

       More than 450 software development companies employing
            30,000+ employees.

       Annual R&D expenditures in Austin has risen from less than
            $200 million prior to 1980 to in excess of $1.4 billion by the
            private and public sectors with the number of technology
            patents awarded to the areas inventors nearly doubling since
            1991.

        Groundbreaking nanotech projects today will mean incredible
    regional--and national--job growth in the future. Again, serious
    analysis on this point is needed going further to make proper
    determination and to aid planning.

        Question 2. How can this industry effect areas of high unemployment
    such as my home state of Oregon?
        Answer. Nanotechnology will create jobs in two profound ways:

            1.  New development of jobs and industries
            2.  Invigoration of old industries as the opportunities
            provided by nanotechnology render their continuation and
            location economically feasible.

        Nanotechnology is already fueling development in new methods of
    drug delivery and medical treatments (in Texas and California); fuel
    and solar cell development (in New York and Texas); and organic
    electronics and quantum computing (in California, Colorado and New
    York).
        An example of a industry that is about to demonstrate explosive
    growth through nanotechnology is the sensors sector. Sensors have
    gradually found their way into vehicles and personal appliances, but
    their size and cost have placed major limitations on their availability
    and use. The industry was hitherto unable to maximize its extraordinary
    potential: small and inexpensive sensors to detect pathogens on meat,
    poisons in the air, diseases and disorders in the body, even tire
    pressure and stress on an aircrafts wings. Nanotechnology is rapidly
    providing the opportunity--through capability, size and price--to fuel
    this development. Barriers to entry in this field from an R&D and
    manufacturing perspective are very low and areas of Oregon and other
    regions experiencing economic stress could certainly build and attract
    efforts in the field.
        As to invigorating old industries, nanotech is providing radical
    innovations to current products: composite materials, coatings,
    textiles, lighting, batteries and semiconductors, to name a few. at an
    ever increasing rate, many of these sectors have been transitioning to
    lesser-developed nations, leaving job loss in their wake. If the U.S.
    invests sufficiently in nanotechnology, its developments will make
    these industries economically feasible for the U.S. again.
        For example, the textile industry has all but left the United
    States, leaving major unemployment in its wake. Companies such as Nano-
    Tex and eSpin are now providing radical improvements to this field with
    wear resistant and water and stain repellent technologies. The cost of
    implementing these technologies into the manufacturing processes of
    textiles is nominal, yet it provides the industry with enormous
    financial incentives to keep factories in the United States, where such
    technology is easily available.
        New York State explicitly noted that the ``Capital District'' where
    the Albany NanoTech is located has both the solid university resources
    to build around, and a manufacturing base of great potential but now in
    despair since the relocation of IBM, Philips and other companies
    operations. The decision to align this nanotechnology development
    project with this region is purposeful and will allow for R&D to
    interplay with corporate and employment development.
        Focusing on Oregon's major employers we see the following interplay
    of nanotechnology:

       Healthcare (Children's Hospital, HMOs, etc): New drug
            delivery and treatment techniques using Bucky Balls and Q Dots;
            new MRI and X Ray technologies using caged atom techniques; new
            bio-sensor detection methods to spot diseases at their earliest
            stages.

       University System (OU, OSU, etc): Research programs across
            the spectrum of nanotech--materials science, catalysts, life
            science and medical, and IT and electronics. Potential to spin
            off start-ups and collaborate with in-state corporations.

       Nike: Health Sensors and monitors; stain and wear resistant
            nano-fabrics; and composites materials for the soles of shoes
            and athletic gear.

       Intel: Continuation of Moore's law through nanoscale chip
            development and production technologies.

       NORPAC Foods: Sensors to detect pathogens on foods; new,
            more energy efficient refrigeration; new fuel, and lighting
            systems technologies.

        The NanoBusiness Alliance strongly urges that the Federal
    Government undertake an effort to determine those regions most likely
    to experience a major industrial impact from nanotech at the
    management, research and wage earner levels. Additional studies are
    needed for PhD, MBA level development, as well as at America's 4-year
    undergraduate level and at two-year colleges.

        Question 3. What does it take to get a successful nanotechnology
    hub going? What elements do these communities share? How can the
    Federal government help in that process?
        Answer. This question is extremely important, as prevailing
    economic theory demonstrates the importance of developing such hubs. In
    his book ``The Competitive Advantage of Nations,'' Harvard Business
    School professor Michael Porter makes the case for a new approach for
    both understanding and creating economic success in a global economy.
    Porter relates the competitiveness of nations and regions directly to
    the competitiveness of their home industries. Moreover, he argues that
    in advanced economies today, regional clusters of related industries
    (rather than individual companies or single industries) are the source
    of jobs, income, and export growth. These industry clusters are
    geographical concentrations of competitive firms in related industries
    that do business with each other and that share needs for common
    talent, technology, and infrastructure (Mary Watts, ASU). Call it the
    power of collaboration.--a new competitiveness framework for state
    economic development.
        For any cluster development to work, government, corporations,
    start-ups, service firms, non-profits, venture capital and start-ups
    must come together to develop three tiers of interaction and
    collaboration:

       First Tier: Leading companies and/or research universities

       Second Tier: A myriad businesses that provide supplies,
            specialized services, investment capital, and research to these
            companies and others involved in the nanotech field.

       Third Tier: is composed of essential economic foundations
            (e.g., advanced infrastructure, specialized workforce training,
            R&D capability, the pool of risk capital available in the
            region) that are the building blocks of healthy clusters and a
            competitive economy.

        At this point no region has reach true critical mass in developing
    a nanotechnology cluster. The industry is so nascent and has been
    developing at an unexpectedly rapid rate that has prevented anyone from
    developing an insurmountable lead. What my organization, the
    NanoBusiness Alliance, has attempted to do is jumpstart the creation of
    nanotech clusters through our NanoBusiness Hubs Initiative. The
    Alliance Hubs bring together business leaders, researchers, government
    officials, investors, corporations, service industry principles, start-
    ups and other interested parties to drive forward the growth of
    nanobusiness in their regions. The new program kicked-off in New York,
    San Francisco/Silicon Valley, Colorado, Michigan, San Diego and Metro--
    Washington DC.
        The NanoBusiness Alliance Hub Initiative serves as a localized
    catalyst to fuel understanding, discussion, planning, and
    implementation for area specific nanobusiness development. Each
    Alliance hub undertakes the process of bringing together key
    stakeholders to develop regional nanotechnology business clusters. In
    turn we provide them with a top line assessment of their nanotech
    assets (universities, start-ups, corporate efforts, etc), generalized
    best practices of other regional development (using past industries
    efforts and current regional nanotech efforts as a model), organizing
    meetings with area stakeholders and networking their efforts into our
    other regional hubs so they can interact. Our goal is not to run these
    efforts, but to set them in motion and tie them together through our
    organization.
        To be perfectly blunt, our resources at the Alliance have been
    completely over tasked. We are proud of our work to date and have
    already gotten major progress under way in the New York and Colorado,
    substantial movement underway in 4 other regions, as well as other
    efforts in Chicago and Texas into our network, we are an organization
    of under 10 employees, on a tight budget raised through corporate
    membership, events attendance, and report sales and can no way meet the
    demands of organizations in 35 states and 11 countries that have
    contacted us to help develop this capacity.
        What the Federal Government could do to be a force in jumpstarting
    the effort to create regional hubs is the following:

       Education: Too few political and corporate leaders, as well
            as the general public know anything about nanotechnology or its
            economic promise.

         National NanoBusiness Summit: Hold a high profile national
            summit in Washington DC to educate the public on the future of
            nanotechnology as a science, a technology and a business. Make
            special efforts to educating the youth of America to pursue the
            study of the physical sciences as a path for their future.

         Trade Missions/Exchanges: Hold trade missions between the
            U.S. and other leaders in the nanotechnology field to find
            opportunities for collaboration and markets for their nanotech
            developments.

         Regional Events: It is not enough to hold a large scale
            event in Washington to spread the word of nanotechnology and
            its economic impact, efforts must be made to hold events in
            states and regions to spark excitement.

         Database: Though databases are being developed for the
            nanosciences, no effort has been made to create or fund a
            database of corporations, start-ups, supporting service firms,
            and investment resources. There is also no platform for
            existing government resources under one p banner for nanotech--
            contracts, grants, loan programs. Not only to inform but also
            to be a platform for collaboration. Regions could also explain
            their efforts and share best practices.

         Studies: Many basic studies to understand the dynamics of
            the nanotechnology economy have yet to be performed. The
            Departments of Labor, Education, Commerce, HUD, and Defense are
            all necessary components in developing an understanding of the
            nanotech workforce of tomorrow, its economic impacts and the
            state of global competition, etc. In addition, as we learned
            from how foreign markets have addressed GMOs, there is a real
            aversion to surprises in technology development. Nanotech is
            about to offer up many such surprises. There is a real need for
            global studies on the health and environmental effects of
            nanoscience right now or there may be major consequences
            later--either real or imagined--that will slow and perhaps
            cripple important developments.

       Coordination: Make the National Nanotechnology Initiative
            more than just an oversight and funding agency for basic
            research. The NNI should also be equipped to address the needs
            of the emerging business of nanotechnology and study the
            competitive business climate in the U.S. and abroad. There
            needs to be strong linkages with agencies such as Department of
            Commerce Office of Technology Policy, the Department of Labor
            and the Department of Education.

       Capital: The timing for the sudden rise of nanotechnology as
            a business could not be worst in terms of market conditions on
            Wall Street and in the venture capital sector. Recent corporate
            announcements by GE and Microsoft noting they saw real
            opportunities in new future markets (like nanotechnology), and
            hence were increasing R&D efforts, were met with extremely
            negative responses on the Street.

            There is no need for the Federal government to become a blank
            checkbook for the nanotech industry with huge levels of new
            funding for business. However, the Federal Government would be
            missing a real opportunity to advance the nanotechnology
            industry if it did not develop some level of new incentives
            and, grant and loan programs. In addition, the Federal
            Government should have a mandate to take existing programs and
            ensure that they reach out to emerging technologies, such as
            nanotechnology--particularly at Defense, Agriculture and SBA.

            In addition, though NIST ATP has certainly had its problems and
            has many opponents, it nonetheless is a program that could be
            critical to the long term development of nanotechnology. ATP is
            almost unique in the Federal Government in that it acts as a
            conduit for funding during the critical middle stage of
            development--post-basic research/pre-commoditization--when
            companies are dealing with issues such as packaging, scaling
            and integration. This is a timeframe that no venture capital
            firm will fund--and a timeframe they affectionately refer to as
            the ``valley of death.''

       Government Practices: There are many existing programs and
            methods employed by the Federal Government if changed could
            provide much needed assistance and resources to the emerging
            nanotechnology industry without requiring huge funding outlays.
            Some examples include:

         Tech Transfer: The technology transfer environment in the
            U.S. is abysmal at the university and government level--though
            admittedly the government is certainly making greater strides.
            Efforts should be made to reform the execution of the Bayh-Dole
            Act or to rewrite it. In addition, government labs, the land
            grant college system, and any university working on government
            research grants, should be pushed to post their nanotechnology
            IP portfolio in a central NNI database along with appropriate
            contact information to spur use and commoditization of these
            technologies.

         Patents: The U.S. Patent and Trademark Office is among the
            most highly overburdened organizations in the government. The
            PTO is expected to receive 350,000 patents applications this
            year and on top of backlog roughly equal to that number. PTO is
            the gateway to technology commercialization on America. It must
            be given the necessary funds (or allowed to retain their fees
            collected) in order to properly attend to nanotechnology and
            other emerging technologies.

              Case in point, PTO must have the funding to provide training
            to its examiners in the field of nanotechnology. Nanotech is an
            extraordinarily cross-disciplinary technology reaching into
            nearly all sectors of examination at PTO. Efforts must be made
            to ensure PTO can properly understand and manage the
            nanotechnology patent application process. In turn, PTO must
            also work with the nanotechnology industry to help train its
            researchers and companies so that legal protections are
            appropriate and timely. At the NanoBusiness Alliance we have
            begun to work with PTO on these issues, arranging for meetings
            between industry and officials and bringing in researchers to
            talk with PTO examiners about their work. Indeed we have found
            PTO officials to be extraordinarily welcoming and professional.
            However, this effort needs to be more formalized and extensive.

              In addition, it is imperative that Congress address the
            October 3, 2002 Madey v. Duke decision by the Federal Circuit
            which ended the so-called research exemption from United States
            patent law. The effect will no doubt be chilling, essentially
            ensuring that all corporate collaborative research with
            universities and other non-profit research institutions will
            move offshore as every other industrialized country in the
            world recognizes a research exemption in patent law but the
            U.S.

              Before Madey the research exemption had been unquestioned
            under the convincing case law line that came from no less an
            authority than perhaps the leading scholar on the early Supreme
            Court, Joseph Story, in his landmark opinion in 1813 in
            Whittemore v. Cutter which used the now anachronistic term
            ``philosophical'' instead of ``scientific'' to describe the
            experimental use exemption from patent infringement. This
            ``scientific-philosophical'' exemption from patent infringement
            resides at the very core of the Constitutional mandate for
            Congress to create a patent system ``to Promote the Progress of
            ``the Useful Arts''--an essential component being that those
            skilled in such Useful Arts are free to use the knowledge
            imparted by a patent disclosure to create better and newer
            technologies.

              If the United States is to maintain its high level of
            nanotechnology research--as well as any other emerging field of
            scientific study whether it be biotech, photonoics, or fuel
            cells--it is essential that the Congress not wait to see if the
            Supreme Court intervenes on Madey, and immediately reinstate
            the research exemption into law. If this is not done
            immediately, expect corporate research collaborations with
            America's universities and non-profit institutions in America
            to come to a near end as this work is exported globally to the
            major research centers of the world--Kyoto, Zurich or Shanghai.

         FDA Advisory Committee: Much like the PTO, FDA is an
            enormously burdened agency. FDA historically has responded to
            new directions and techniques rather than being proactive. With
            such revolutionary developments as bucky ball drug delivery and
            protease inhibitors, quantum dot disease detection, and pin
            point cancer detect and removal through gold nano-shells all in
            advanced laboratory development, it is imperative that FDA be
            ready to rapidly and properly address and evaluate these
            developments and not let them languish--at the peril of the
            American public--for a decade or more of evaluation. That is
            why we strongly recommend that FDA be compelled and funded to
            immediately create an internal advisory committee on
            nanotechnology. This committee would establish education
            initiatives and relationships in the nanotech research
            community to ensure that future evaluations of developments are
            handled with great speed and great caution.

         EPA: Because of the rapid development of nanotechnology
            from science to a business there has been little research done
            into the health and environmental effects of the technological
            developments. While all current evidence suggests that c60 is
            safe for long term use in the body, we don't know definitively.
            Activist groups, many of which have been involved in limiting
            the growth of the GMO industry, are already lining up against
            nanotechnology development, some even calling for moratoriums
            on commercialization. This can't be allowed to happen.

              For the industry to develop and meet its potential, we need
            study and we need public education to begin now. The
            NanoBusiness Alliance is working with our European and Canadian
            counterparts to create a foundation to ensure that a dialog on
            nanotechnology's health and environmental effects is begun
            immediately. We are seeking to ensure that studies are
            undertaken and that public awareness campaigns are begun today.
            Our organizations are reaching out to the environmental
            community to work with them to address any concerns they have
            on nanotech's development. We believe that it is imperative for
            the Federal Government to be aligned with these efforts--
            particularly the EPA and FDA.

         Government Grants and Programs: Because of the newness of
            nanotechnology, many researchers, business leaders and
            officials in the field have little understanding of programs
            and grants already provided by the government that may help
            develop nanotechnology. In turn government officials, at say
            SBA, have little idea of how their programs can be adjusted or
            administered to serve this emerging industry. Efforts should be
            made to develop regional outreach events at all major
            government agencies to ensure a dialog and full participation
            in existing programs for the nanotechnology community. In
            addition, the NNI website should become a one stop shop for all
            government programs and grant information that may be open to
            the NanoBusiness community.

              Another area to address is evaluation criteria. Many self-
            funded companies in the nanotech arena have complained at
            length at how SIR criteria--for instance--is unbalanced and
            better serves venture backed start-ups.

              In addition, criteria for evaluating new nanotech centers--
            whether it be new round of NSF, DoD or DOE centers--should be
            made to include commercialization planning and regional
            development planning as a grading criteria so that it does not
            become merely for research sake.

         Advisory Board: The NanoBusiness Alliance and our member
            organizations welcome the call for the 21st Century
            Nanotechnology Research and Development Act for the creation of
            a national advisory board on nanotechnology. We believe that it
            is imperative that the President and Congress have top advisors
            from outside the government--people who are on the front lines
            of nanotechnology' s development--to provide vital feedback and
            advice on the NNI and overall government nanotech efforts.
            However, we feel it is essential that such a board reflect the
            full spectrum of the nanotechnology community and not be a
            board made up of just the research community. Nanotechnology
            business leaders--start ups, corporations, even service
            industry executives must be part of this effort to ensure that
            it is effective. Also, it is vital that the various regions of
            the U.S. where nanotech is developing be included fairly, so
            that traditional tech clusters like Silicon Valley, Boston and
            greater Washington been't included at the exclusion of other
            developing regions such as the Pacific Northwest, Chicago,
            Texas, upstate New York, and others. Lastly, it is of grave
            importance that the Advisory Board also cover the breadth of
            the nanotechnology field--life sciences; material sciences;
            electronics; etc.--and not merely concentrate on one or two
            areas.

         NNI Mission: Lastly, and perhaps most importantly, it is
            vital that the NOT's mission be expanded beyond the initiation
            and funding of basic research, and extend to the developing
            business of nanotechnology and ensure America's leadership in
            global marketplace.

    Government Investment
        Question 4. Some critics of the National Nanotechnology Initiative
    argue that the research portfolio is not in balance, currently favoring
    readily achievable research goals and not sufficiently supporting high-
    risk research, such as truly exploratory work in molecular
    nanotechnology. Do you agree or disagree? Please explain.
        Answer. We generally disagree. The NNI portfolio and other
    government programs such as NIST ATP have been in solid balance funding
    near, mid and long-term efforts. This should continue. The
    nanotechnology field includes many long-term visionaries and to be
    honest, some that harbor extreme ideas on technology development. It is
    not the government's role in our opinion to fund their fantastic ideas
    at the expense of real development for the American people and our
    country's economy.
        Currently the most under-funded area of nanotechnology is not the
    longer-term ideas such as universal assemblers, it is actually the mid-
    term development stage--the so-called ``valley of death.'' This is the
    period after basic research but before commercialization. This period
    of research and application development includes scaling, packaging,
    and integration. Except for NIST ATP and some DARPA programs, no
    government effort addresses this period in the life cycle of
    development. Corporations and VCS also do not normally provide funds
    for this period. This is an area that particularly the Asia countries
    excel at--which is why so many Japanese and Korean companies are
    attempting to license U.S. nanotech research right now. We need a
    comprehensive effort on the part of the Federal Government to make
    funds available for this stage of nanotech's development as it will
    have the greatest impact on our people and our industries.
        In this competitive budget environment it is important that funding
    priorities remain in balance and frankly touch more near term and
    achievable developments. With that said, as an industry that is
    projected to have an unrivaled impact of the global economy, we feel
    that more funding is necessary so that efforts can be enhanced and
    perhaps some longer term theories can be funded. We would like to see
    another doubling of the U.S. nanotechnology budget within two years to
    ensure our nation can compete globally in what is becoming the next
    industrial revolution.

        Question 5. Given that other countries are also investing
    significant amounts in this field, do you feel that we are doing enough
    to ensure our leadership in this field?
        Answer. No. Nanotechnology is emerging as a truly global
    technology. Unlike the many waves of technological development,
    nanotechnology is not dominated by the United States. In several areas
    of nanotechnology the U.S. is being outpaced by foreign competition.
    The Japan, EU, Russia, Korea, and China are all significant players in
    the field of nanotechnology.
        A recent report from the Journal of Japanese Trade & Industry notes
    that the Japanese government views the successful development of
    nanotechnology as the key to ``restoration of the Japanese economy.''
    They are not alone. Funding has grown at unprecedented rates across the
    globe over the last three years.
        The upside of 2000's NNI announcement was that it provide the U.S.
    with a rallying point as well as additional funding for nanotechnology
    development. The downside was it set off a global competition not seen
    since the space race of the 1960's. In addition, most of these foreign
    efforts include strong corporate interaction, unlike the U.S. NNI
    effort that for the most part is a basic research program.
        The EU just announced a new $685.4 million budget for research in
    nanotechnology and the formation of the EU Nanotechnology Industrial
    Platform. When individual country spending is added to the EU mix,
    overall spending is nearly double that of the U.S. EU corporate
    spending has remained generally on par with ours.
        The Japanese are outspending us from a government perspective and
    their corporations are far more aggressive than ours in R&D and
    investment. There are few U.S. based start-ups in the nanotech field
    that have not been contacted by Japanese investors. Also in Asia, China
    in adjusted dollars is clearly outspending the U.S.--and Korea,
    Singapore, Taiwan and others all have very significant programs
    underway. Add to this that the majority of U.S. nanotechnology grad
    students and post-docs are non-U.S. citizens from Asia.
        If one is to add to this construct the current U.S. business
    environment of R&D cuts, Wall Street in a severe downturn, and a
    stagnant VC market, the U.S. nanotechnology market is in need of
    serious attention and assistance from the Federal Government.
        To turn this around the U.S. government must consider the
    following:

       Increased funding for research and centers; additional
            incentives and contract opportunities for nanotech business;
            and extending current and adding new loan and assistance
            programs for nanotech businesses.

       Additional coordination between agencies and among
            government programs to reach out to the nanotech research and
            business community.

       Information development in terms of monitoring and
            developing reports on global competitiveness; regional
            development; best practices; etc.

       Promote regional development through information databases.

       Promote business development through omnibus government
            database of resources.

       Refashion the NNI to include a strong commercialization and
            industry development platform.

       Improve the current state of technology transfer in the U.S.

       Provide educational and organizational resources for PTO,
            FDA, and other agencies at the front line of developing the
            U.S. nanotechnology industry.

       Develop model curriculums for U.S. schools for nanotech.
            Create programs to promote careers in the nanotechnology field
            to get more U.S. kids into this field now before it is too
            late.

        Question 6. What role could a Nanotechnology advisory committee of
    academic, finance, and industry experts serve in improving and
    grounding the Federal government's nanotechnology research? Would you
    support the creation of such an advisory committee?
        Answer. The NanoBusiness Alliance and our member organizations
    welcome the call for of the 21st Century Nanotechnology Research and
    Development Act for the creation of national advisory board on
    nanotechnology.
        We believe that it is imperative that the President and Congress
    have top advisors from outside the government--people who are on the
    front lines of nanotechnology's development--to provide vital feedback
    and advice on the NNI and overall government nanotech efforts. We feel
    it is essential that such a board reflect the full spectrum of the
    nanotechnology community and not be a board made up of just the
    research community. Nanotechnology business leaders--start-ups,
    corporations, even services industry executives must be part of this
    effort to ensure that it is effective. Also, it is vital that the
    various regions of the U.S. where nanotech is developing be included
    fairly, so that traditional tech clusters like Silicon Valley, Boston
    and greater Washington been't included at the expense of other
    developing regions such as the Pacific Northwest, Chicago, Texas,
    Upstate New York, and others. Lastly, it is of grave importance that
    the Advisory Board also cover the breadth of the nanotechnology field--
    life sciences; material sciences; electronics; etc.--and not merely
    concentrate on one or two areas.
        As to the role of the board:

       Advice and real world feedback as to the industry's needs
            and the effects of current government efforts.

       Assist with the overall NNI coordination between government,
            academia and industry.

       Bench marking, review and evaluation of government
            nanotechnology efforts.

       Development and review of reports, studies, and surveys on
            the field.

       Promotion of the science and business of nanotechnology.

    Intellectual Property.
        Question 7. Mr. Modzelewski, in your testimony, you expressed
    concerns over the current state of intellectual property and the U.S.
    Patent and Trademark Office.
        Answer. Can you provide specific recommendations on how to improve
    the Patent Office system so that it does not hamper nanotechnology
    growth and innovation?
        The U.S. Patent and Trademark Office is among the most highly
    overburdened organizations in the government. The PTO is expected to
    receive 350,000 patents applications this year and on top of backlog
    roughly equal to that number. PTO is the gateway to technology
    commercialization on America. It must be given the necessary funds (or
    allowed to retain their fees collected) in order to properly attend
    nanotechnology and other emerging technologies.
        Case in point, PTO must have the funding to provide training to its
    examiners in the field of nanotechnology. Nanotech is an
    extraordinarily cross-disciplinary technology reaching into nearly all
    sectors of examination at PTO. Efforts must be made to ensure PTO can
    properly understand and manage the nanotechnology patent application
    process. In turn, PTO must also work with the nanotechnology industry
    to help train its researchers and companies so as that legal
    protections are appropriate and timely. At the NanoBusiness Alliance we
    have begun to work with PTO on these issues, arranging for meetings
    between industry and officials and bringing in researchers to talk with
    PTO examiners about their work. Indeed we have found PTO officials to
    be extraordinarily welcoming and professional. However, this effort
    needs to be more formalized and extensive.
        It should be noted that the signing of H.R. 2215 will make it
    easier for nanotechnology companies to eliminate mistakenly granted
    patent claims that would otherwise hinder their business development
    efforts. Other possible efforts can include accelerated patent
    examinations for a reasonable fee should be permitted to enable
    nanotechnology companies and other high-tech companies to bypass the
    backlog of cases at the U.S. Patent Office.
        In addition, it is imperative that Congress address the October 3,
    2002 Madey v. Duke decision by the Federal Circuit which ended the so-
    called research exemption from United States patent law. The effect
    will no doubt be chilling, essentially ensuring that all corporate
    collaborative research with universities and other non profit research
    institutions will move offshore as every other industrialized country
    in the world recognizes a research exemption in patent law but the U.S.
        Before Madey the research exemption had been unquestioned under the
    convincing case law line that came from no less an authority than
    perhaps the leading scholar on the early Supreme Court, Joseph Story,
    in his landmark opinion in 1813 in Whittemore v. Cutter which used the
    now anachronistic term ``philosophical'' instead of ``scientific'' to
    describe the experimental use exemption from patent infringement. This
    ``scientific-philosophical'' exemption from patent infringement resides
    at the very core of the Constitutional mandate for Congress to create a
    patent system ``to promote the progress of the useful arts''--an
    essential component being that those skilled in such ``Useful Arts''
    are free to use the knowledge imparted by a patent disclosure to create
    better and newer technologies.
                                     ______

          Response to Written Questions Submitted by Hon. Ron Wyden to
                              Dr. Samuel I. Stupp
    Bayh-Dole
        Question 1. In testimony before the Subcommittee, Dr. Stan Williams
    of HP stated that due to U.S. universities' interpretation of
    intellectual property sharing regime created under Bayh-Dole, it is
    easier to work with foreign universities rather than U.S. academic
    institutions. How would you respond to this criticism from the academic
    side? Does Bayh-Dole need an overhaul? If so, what would you
    specifically suggest?
        Answer. My personal view is that U.S. universities have been
    extremely proactive on technology transfer over the past decade, and I
    do not see any obvious problem with the system. If you look for example
    at the large number of successful start up companies in biotechnology
    and other fields that have emerged from technology transfer activities
    at universities, you see definite evidence of a healthy system. Many of
    these companies are now public and as far as I know no other country in
    the world is as successful as we are in this respect. I have no doubt
    that this proactive trend will continue into the nanotechnology era
    over the next few decades and I certainly do not see a justification
    for U.S. industry to flock to foreign universities to acquire
    technology. Of course there will always be exceptions, when very
    specific technologies are available for licensing overseas or when
    going a broad will be the only way to strike a ``good deal'' for large
    U.S. corporations. I do not know what experience Mr. Williams has had
    that would lead him to hold his opinion.
        Before opening a public forum on the subject, one would need to
    back up with good stastistics the alleged inappropriate practices by
    U.S. universities on technology transfer. My feeling is that
    stastistics will not support the case, and that the Bayh-Dole act does
    not need an overhaul. Furthermore, I would add that even ignoring
    technology transfer, the billions of dollars invested in research at
    U.S. universities have yielded over the course of decades the best
    technical/scientific work force in the world. This has been a
    critically important return for the economic success of our country.
    Furthermore, now that large U.S. corporations have downsized their
    research and development infrastructure, mostly for financial reasons
    in my view, universities are the ones leading the way to technical
    innovation as well as playing the role they always played of educating
    our scientists and engineers. Is it appropriate to tamper now with
    Bayh-Dole, I don't think so.
    Promises of Nanotechnology
        New revolutionary technology often promises to ``change the way we
    live.'' Often times visionaries tell of how these technologies will
    enable better, more improved lives. There have been a number of
    promises about the bright potential of nanotechnology. For example, I
    have heard that with the ability to manipulate atoms, we can completely
    forgo smelting and instead essentially ``grow'' steel. While this is
    undoubtedly promising, it sounds rather fantastic.

        Question 2. Can you distinguish for me between what is reasonably
    achievable and what are exaggerations?
        Answer. I think growing steel because we have now demonstrated the
    ability of manipulating individual atoms is an exaggeration. Smelting
    will be around for a very long time. That said, nanotechnology has
    undoubtedly the potential to change the way we live. My favorite
    examples are its potential impact on health care and personal as well
    as homeland security. Making nano-sized objects that can deliver
    medicines or genes to the specific cells that need them is definetely
    something that can happen and it would have remarkable impact on our
    ability to cure certain diseases and also controld the side effects of
    medication, including the life-threatening consequences of cancer
    chemotherapy. Regeneration of tissues, including the spinal cord, the
    heart, the retina which impact on dreams such reversing paralysis and
    blindness, or returning to a completely normal life after heart
    attacks. Along with advances in biology and medicine, nanotechnology
    will impact this field because regenerative medicine will require
    directing cells with nanostructured devices and materials. It is also
    reality that we can build with nanotechnology powerful machines to map
    out genomes very fast compared to current capabilities. This of course
    will have innumerable consequences in disease prevention and cure, but
    it will also advance biology faster. It is also real that we can
    achieve with nanotechnology the fabrication of single molecule
    detectors. This would have a profound impact on our security alerting
    us of dangerous events a lot earlier than we can today. There is no
    doubt that nanotechnology can also get us into a completely different
    regime of the information age giving us faster, smaller, and softer
    computers. On the lighter side it is also real that nanotechnology will
    help us look better and healthier--we are only starting to see what
    wonders nanotechnology can bring to the world of cosmetics. The real
    vision of nanotechnology will no doubt include other things that we
    cannot anticipate now that may deeply touch transportation and energy
    technologies.
    Government Investment
        Question 3. Some critics of the National Nanotechnology Initiative
    argue that the research portfolio is not in balance, currently favoring
    readily achievable research goals and not sufficiently support high
    risk research. Do you agree or disagree. Please explain.
        Answer. I would agree that the NNI portfolio needs to fund more
    high risk long term research. This was one finding of the National
    Research Council's review of the initiative. In my own opinion, our
    research funding system is in general not very conducive to long term
    research because, budgets for the agencies fluctuate a lot leading to
    year-to-year programmatic changes, there is insufficient NSF funding,
    and the NIH has too much money and only a tiny piece of it is invested
    in long term technology-based research.

        Question 4. Given that other countries are also investing
    significant amounts in this field, do you feel that we are doing enough
    to ensure our leadership in this field?
        Answer. In my opinion, we are not doing enough in nanotechnology
    research. In order to keep a balanced portfolio within the NNI that
    targets both short range development of nanotechnology products and at
    the same time maintain funding stability for long range nanoscience we
    need to be ramping up rapidly to a budget of at least one billion
    dollars a year. Our report shows for example that Japan's
    nanotechnology budget is similar to ours. Normalizing by our GDP it is
    clear that we do not have equal capabilities. This is particularly
    important given that large industries are not contributing as much as
    they would have two decades ago to the research and development
    infrastructure. One critical issue is to raise the budget of the NSF,
    and get the NIH to engage in research programs on nanotechnology that
    are out of their box.

        Question 5. What role could the Nanotechnology advisory committee
    of academic, finance, and industry experts that was suggested by the
    Academy panel serve in improving and grounding the Federal government's
    nanotechnology research?
        Answer. This panel would be able to perform several critical
    functions. One of them is to guide the NNI's development in the context
    of ongoing scientific interests and discoveries in the international
    community. They could be a very important science and technology
    ``radar'' to ensure that programs being funded couple to the most
    promising directions rather than to the internal interests and concerns
    of the various federal funding agencies. They will police for a more
    effective development of nanoscience and nanotechnology. Another
    important function will come from the members of this board associated
    with industry. These individuals can guide the programs to areas of
    interest to our economy in the global competition, ensuring that
    adequate programs of this type are always part of the NNI. This board
    should also develop the appropriate metrics to judge the success of the
    NNI and the changing needs for investment in this initiative year to
    year.

        Question 6. All of us have called out the economic potential of
    nanotechnology. Let me play devil's advocate for a moment--if
    nanotechnology is such a huge, revolutionary area, why should the
    Federal government invest here? Why can't companies bear this burden,
    if they are going to be positioned to reap the profits?
        Answer. Companies, particularly the large ones that have
    traditionally had the greatest resources, cannot develop effectively
    the nano era of science and technology because they have by now nearly
    destroyed their R&D laboratories guided by Wall Street forces, merges
    and acquisitions. Most industrial labs are focused on short term
    product development and improvement. The most promising activities with
    regard to industry lie in start companies and these are often
    associated with universities. Once these grow and become successful
    they will hopefully use their wealth to remove at least part of the
    burden from the Federal Government. Thirty years ago maybe the argument
    would have been valid but at this time we need to move quickly in the
    global competition and there is no time to wait for industry to rebuild
    its long term research infrastructure. Funding to universities and
    small companies would be at this time the fastest route to success at
    this time.

        Question 7. What do you see as the biggest challenges nanoscience
    currently faces? In other words, what barriers could potentially keep
    nanotechnology from reaching its potential?
        Answer. One barrier in my view would be a weak economy because we
    will then loose any chance of engaging industry for development that
    uses technology transfer from our academic and government laboratories.
    Another barrier is of course political instability in the world which
    is of course a real threat at this time. Nanotechnology development
    will benefit from meaningful international partnerships and flow of
    scientific information and people among communities in different parts
    of the world. Another possible barrier has to do with our educational
    systems. In this regard the interdisciplinary culture in which young
    scientists are conditioned and challenged to work on complex problems
    is a very important element for nanotechnology development to its
    optimal potential.
    Multidisciplinary Education
        It appears that nanotechnology is an interdisciplinary science,
    combining facets of chemistry, materials science, computer science,
    biology, mechanical and electrical engineering, and physics.
        Question 8. How well prepared are our universities to produce the
    next generation scientists who have the requisite expertise in multiple
    disciplines in order to ensure that the United States continues to lead
    in nanotechnology research?
        Answer. Programs at our universities are changing rapidly toward
    the interdisciplinary mode which is very critical to nanotechnology
    development. However, they are still sub-optimal and very deep cultural
    changes need to occur for the various scientific communities to learn
    to recognize and respect the value of interdisciplinary activity in
    science. Most scientists are hesitant to operate outside their comfort
    box, but starting early on with young students we can encourage those
    with interdisciplinary intelligence to stick to this mode throughout
    their careers and eventually natural selection will produce the right
    community for optimal nanotechnology development. The broad scientific
    scope of nanoscience and also its broad range of applications requires
    very definitely individuals who are themselves interdisciplinary and
    can work at interfaces among fields. Multidisciplinary teams, the
    current common mode in universities is not effective for
    interdisciplinary activity. It only serves to hide individuals that
    cling on to traditional modes of scientific thinking and results in
    ineffective investment in nanoscience which is a pervasive revolution
    across all of science. The nanotechnology board can play a key role in
    helping the agencies catalyze the process with innovative programs.

        Question 9. What needs to be done to promote a multidisciplinary
    curriculum at all levels, not just universities, so that we have a
    properly educated nanotechnology workforce?
        Answer. We need to create programs from the top (OSTP for example)
    that offer significant resources to inter-agency programs at all levels
    that will attract what one might describe as individuals with
    interdisciplinary intelligence. The hope is that these populations of
    strong interdisciplinary scientists will eventually dominate the
    community demonstrating their ability to make key discoveries on
    complex phenomena and invent new things. This is a natural selection
    problem that nonetheless needs guidance from the top.
    Measurement Tools
        Dr. Stupp, the Academy panel pointed out the need to develop the
    tools and measurements to support nanotechnology in order to spur
    nanotechnology innovation.
        Question 10. Please explain this recommendation. What agency or
    agencies are best known for this field? Are we allocating enough
    resources in this area?
        Answer. The development of new tools is key for nanotechnology. In
    fact it was new instruments enabled by microtechnology and software
    that spearheaded many of the activities we now label as nanotechnology.
    Agencies such as the Department of Energy and the NSF have always
    played a pivotal role on tool development. These agencies cannot afford
    to fund sufficient research activity on tool development. This is
    clearly a budget problem, and no we are not allocating sufficient
    resources to this objective. The NIH and possibly DoD should take a
    stronger interest in funding outstanding teams and even international
    collaborations to develop new tools for measurement, manipulation, and
    characterization of nanoscale systems. Clearly DOE and NSF need greater
    budgets to be able to address this problem.
                                     ______

          Response to Written Questions Submitted by Hon. Ron Wyden to
                              R. Stanley Williams
    Bayh-Dole.
        Question 1. In your testimony before the Subcommittee, you stated
    due to U.S. universities' interpretation of intellectual property
    sharing regime created under Bayh-Dole, it is easier to work with
    foreign universities rather than U.S. academic institutions. What would
    it take for you to work with U.S. universities? Does Bayh-Dole need an
    overhaul? If so, what would you specifically suggest?
        Answer. I believe that it is still possible for leaders of good
    will from U.S. academia and industry to agree on a workable compromise
    that is fair and equitable to both parties and that satisfies the
    intent and the letter of the Bayh-Dole act.
        Unfortunately, we have seen significant polarization between
    attorneys representing these groups, and the level of acrimony has
    risen to the point that I despair that we can work together in the
    future. Typically at present, negotiating a contract to perform
    collaborative research with an American university takes one to two
    years of exchanging emails by attorneys, punctuated by long telephone
    conference calls involving the scientists who wish to work together.
    All too often, the company spends more on attorneys' fees than the
    value of the contract being negotiated. This situation has driven many
    large companies away from working with American universities
    altogether, and they are looking for alternate research partners.
        On the other hand, many high quality foreign universities are very
    eager to work with American companies, and by keeping attorneys out of
    the discussion completely they have streamlined processes to allow a
    successful negotiation to take place in literally a few minutes over
    the telephone. It is possible to specify what one wants to a professor
    at a university in China or Russia and then issue a purchase order to
    obtain a particular deliverable. The deliverable is received and
    verified to be satisfactory before the American company pays for it,
    and in this case the American company owns all rights to the
    deliverable and the process by which it was created. Often, such
    transactions can be completed in a few months, a fraction of the time
    required to just negotiate a contract with an American University,
    which will insist on owning all rights to whatever is produced. Thus,
    just as American companies were long ago forced to deal with high
    quality and low priced foreign competition, American universities will
    either have to modify their behavior or lose their industrial
    customers.
        In my opinion, the root of the problem is in the desperate
    financial situation of most American universities. In the physical
    sciences and engineering, the support from the U.S. government for
    academic research has been decreasing in real terms for over a decade.
    This has forced the universities to try to raise funds from other
    sources. Since a few universities have made a large amount of money
    from a piece of valuable intellectual property, this has encouraged
    nearly all universities to attempt to duplicate this success. However,
    this strategy is rather like planning ones retirement on winning the
    lottery. The vast majority of those adopting this strategy will lose.
        In negotiations between American universities and large companies,
    the term ``Bayh-Dole Act'' comes up frequently to justify an extreme
    position taken by universities with respect to intellectual property.
    Most universities claim that the Bayh-Dole Act requires them to retain
    complete control of all intellectual property produced at the
    university. This then leads to the position by a university that a
    company needs to pay for research that is being done up front in a
    collaborative project, to pay the costs for any patents that are filed
    as a result of the research, and then to enter into a separate
    negotiation with the university to license the intellectual property
    that is created. In many cases, the root idea originated with the
    sponsoring company in the first place, not the university. Companies
    take the view that they are thus forced to pay three times for their
    own intellectual property, which puts them at a significant
    disadvantage with respect to a company that doesn't spend anything to
    sponsor university research. Some companies have agreed to this
    arrangement in the past, but there are several instances where
    intellectual property that was supported and generated in collaboration
    with one company was then licensed to a different company, often a
    start-up that is owned by the professors who participated in the
    research. Again, this behavior is defended as being necessary because
    of the Bayh-Dole Act. However, I contend that this is an extreme
    interpretation of the Act, and in fact there are fair and equitable
    compromises that can be made that in the long run will benefit
    universities much more than the disastrous short-term strategies they
    are now following. Universities will in general receive far more
    funding in the form of research contracts from high tech companies than
    they will by licensing technology, because of the short life of such
    technologies and the fact that it is always possible to substitute one
    technology for another.
        If we look at the actual language of the Bayh-Dole act itself, it
    is difficult to understand where university-industry cooperative work
    is impacted. However, the Council on Government Relations (COGR--``An
    association of research universities--COGR's primary function is to
    help develop policies and practices that fairly reflect the mutual
    interest and separate obligations of federal agencies and universities
    in federal research and training'') has created a set of guidelines for
    university behavior: The Bayh-Dole Act--A Guide to the Law and
    Implementing Regulations (http://www.cogr.edu/bayh-dole.htm) . In these
    guidelines, we find the statement ``In their marketing of an invention,
    universities must give preference to small business firms (fewer than
    500 employees), provided such firms have the resources and capability
    for bringing the invention to practical application,'' which is the
    justification for channeling IP rights to university-based start-ups.
    Unfortunately, these start-ups almost always fail to get their
    technology to the market, since they lack the resources to do so and
    the market itself moves too quickly for them to be ready. The next
    sentence of the COGR guide states ``However, if a large company has
    also provided research support that led to the invention, that company
    may be awarded the license.'' The natural compromise position is this:
    in recognition of the fact that other research support created the
    institution and the general environment where any large-company funded
    research leads to intellectual property, that large company should be
    awarded a nonexclusive license, and the university should have the
    right to sell nonexclusive licenses to any other companies interested
    in buying them. This will be by far the most efficient means of
    actually getting a technology into the market place--by creating a
    competitive environment with multiple entities vying to get the
    technology to market.
        If we fail to find a broad consensus agreement between research
    universities and companies on IP licensing, then I would recommend
    amending the Bayh-Dole act to restrict the ability of a private
    institution that receives federal funding to award exclusive licenses.
    Government Investment
        Question 2. Some critics of the National Nanotechnology Initiative
    argue that the research portfolio is not in balance, currently favoring
    readily achievable research goals and not sufficiently supporting high-
    risk research. Do you agree or disagree? Please explain.
        Answer. I agree with this criticism, but this issue of sandbagging
    research proposals is not restricted to nanotechnology research alone--
    it is endemic within the entire academic and national lab research
    enterprise. Again, the problem is the scarcity of research funds.
    Individual professors believe that the risk of failure is too high, so
    they only propose projects that they know will succeed (or indeed
    projects that they have already completed). To have a `failed' project
    could mean that the professor never gets another grant funded, which is
    the equivalent of academic death. Thus, nearly all projects `succeed',
    but at a very small scale. This extreme risk aversion is now
    characteristic of nearly all research in the physical sciences and
    engineering. It means that in general we are not seeing many big
    breakthroughs, but mainly incremental progress along easily predicted
    directions. In order to escape from this risk-averse environment, it
    must be possible for university researchers to gamble big and not
    receive the equivalent of an academic death sentence if things do not
    work out exactly as they predict--we need to reward grand visions
    whether they turn out to be viable or not. It was possible to do that
    in an era where grant funding was plentiful--it can also be possible in
    an era of restricted funding if agencies decide to play long shots
    consistently, understanding that only a small fraction of them will pay
    off. This is the very nature of the way Venture Capital works, and I
    think that funding agencies should adopt some of the practices of VC's
    when constructing their research investment portfolio.

        Question 3. Given that other countries are also investing
    significant amounts in this field, do you feel that we are doing enough
    to ensure our leadership in this field?
        Answer. The European Union is currently boasting that they own a
    commanding lead in nanotechnology research, that they will invest at
    least twice as much for basic research in this crucial area as the
    United States in 2003, and that the entire field is ``Its Ours to
    Lose'' (title of an October 3, 2002 report issued by the European
    Nanobusiness Association). The Japanese government plans to invest 40
    percent more than the presently announced U.S. National Nanotechnology
    Initiative (NNI) budget for 2003, and has consistently demonstrated a
    strong resolve to raise the ante every time the U.S. provides budget
    figures for the NNI. Given the local purchasing power of a dollar, the
    $200 M budget announced by China is already supporting what is probably
    the world's largest nanotechnology effort in terms of the number of
    young scientists working in the field. Make no mistake about it: we are
    in a global struggle to dominate the technological high ground, and
    thus a large portion of the economy, of the 21st Century. The U.S.
    cannot outspend the rest of the world on research and development this
    time, so we must be by far the most productive at creating new
    technologies and the most efficient at bringing them to the
    marketplace. This will require coordination and cooperation across a
    wide variety of institutions and disciplines such as we have never seen
    before in the U.S.. To fail places the wealth and security of this
    nation at serious risk.
        We certainly can and must invest more in basic research, primarily
    to ensure that all the excellent proposals coming into the funding
    agencies are being supported. My suggestion is that the U.S. should
    increase funding for the NNI at the rate of 30 percent per year for the
    next three years, and monitor the field to make sure the investment is
    well utilized. However, the only hope that we have to dominate this
    field is if we can be much more effective than anyone else with the
    research dollars we spend. Nanotechnologies will all be subject to
    exponential improvements for decades, which means that a sustained lead
    of just one-year in any area by one country can be an insurmountable
    barrier to entry of commercial products for all others. We need to have
    a balanced portfolio, with a reasonable number of well-placed long shot
    investments. Our real strength in American science and technology lies
    in our diversity of institutions: our research universities, our
    National Laboratories and our great corporate research labs. As to the
    latter, much has been made of corporate America's de-emphasis of basic
    research, but in fact we have invested heavily and consistently in
    applied research and development over the past twenty years, and in
    general we have developed the world's best institutions for turning
    technology into products. To win globally in nanotechnology, these
    strategic assets must work together as partners. This will require a
    significant engagement among these institutions to build trust and
    working relationships, which in turn will require wise and consistent
    policies that remain stable and are emphasized over many years. We will
    have to come to a better understanding of intellectual property and its
    value to each of these stakeholders, and attempt to understand how to
    adequately reward each partner while creating the maximum total benefit
    for the country. This is a difficult task, and in my view we are
    presently moving in exactly the opposite direction. Our current
    policies are driving American companies to look overseas for their
    research partners, which eventually will lead to the relocation of
    corporate R&D labs to be close to those partners.
        Question 4. What role could a Nanotechnology advisory committee of
    academic, finance, and industry experts serve in improving and
    grounding the Federal government's nanotechnology research? Would you
    support the creation of such an advisory committee?
        Answer. I am always wary of creating a new bureaucracy, but in this
    case the stakes are so high that I think we should do so on an
    experimental basis. However, this advisory committee has to include
    real decision-makers, people who can come to agreements and obligate
    their institutions to abide by those agreements. Otherwise, it will
    just be a lot of hot air that winds up being more fodder for attorneys
    and multi-year debates. These decision-makers should create model
    agreements for their institutions that would then hopefully be adopted
    as standards for all university-government-corporate research
    interactions. It will take a few bold and brave visionaries to lead the
    way out of our current rather miserable situation. However, I believe
    that once some sensible new practices are established, they will become
    such a strong competitive advantage that the rest of the American
    institutions not leading way will have to follow the leaders.
                                     ______

    Prepared Statement of Dr. Cristina Roman, Executive Director, European
                            NanoBusiness Association

    It's Ours to Lose--An Analysis of EU Nanotechnology Funding and the
            Sixth Framework Programme

    Executive Summary
        With funding for the Sixth Framework Programme (FP6) due to come
    into effect in a few months, comparisons have been made between U.S.
    and European nanotechnology funding that suggest that the U.S. is
    investing significantly more in this important area than the European
    Union.
        In fact, a closer look at the figures, performed here through the
    mechanism of three scenarios, suggests that European Union spending on
    nanotechnology research is not just comparable to that of the U.S. but
    will probably exceed it by a factor of two or more for 2003. Moreover,
    the reason that the `hidden' European funding is not obvious may
    arguably lead to more results per dollar or euro spent. Although the
    increased focus on multidisciplinary endeavours that nanotechnology
    requires does argue for dedicated nanotechnology spending, there is
    also, no doubt, value in framing spending decisions in terms of high-
    level goals, in which nanotechnology will figure only if merit
    dictates, rather than being pre-ordained. The `hidden' FP6 spending is
    of this nature, being directed according to the Framework Programme's
    `thematic priorities'. This balanced approach may well yield dividends.
        According to our analysis, EU nanotechnology funding alone, which
    constitutes between 4 percent and 20 percent of total European research
    funding, will exceed the recently proposed 2003 U.S. nanotechnology
    budget. Given that EU spending often does not cover the infrastructure
    and manpower that U.S. spending does, this being met by individual
    nations, and given that European research funding represents a much
    smaller fraction of total European funding than U.S. federal funding
    does of total U.S. funding, European nanotechnology funding may exceed
    U.S. funding by a factor of 2 in 2003, or greater if funding from
    individual EU nations is taken into account.
        Though this analysis demonstrates that Europe recognises the long-
    term economic potential of a strong nanotechnology research base and is
    acting accordingly, it should not lead to complacency as there are
    still areas that warrant further attention if we want to maximise
    Europe's ability to perform not just world-leading research but to
    translate that into economic benefits. These are outlined below.

    Recommendations
        In order to enable European industry to continue to be competitive
    on a global basis, attention is required in areas beyond providing
    adequate funding under FP6. These need to be tackled at national levels
    and at the European level, both from within the existing European
    structures and through organisations such as the ENA.

       Basic R&D and Fundamental Science: The EU cannot, for
            political and budgetary reasons, coordinate all European
            research. It is essential for all European countries to
            increase their efforts to fund both basic and applied
            nanotechnology research. Individual countries have the ability
            to react much faster to changing scientific and economic
            conditions than the EU, and should use this to their advantage.
            By implementing local measures based on local conditions,
            abilities and market requirements, Europe as a whole can
            maintain its current leading position. While some European
            countries have recognised this challenge and are meeting it
            head on, others could do more.

       Business Climate: The climate for nanotechnology business
            start-ups across Europe varies from friendly to positively
            hostile. This applies both to government regulations and
            funding bodies, both private and public.

       Technology Transfer: The wide variations across Europe will
            lead to a technological divide. While academic research is of a
            generally excellent standard across the continent, technology
            transfer is not. This will have an impact on both the corporate
            funding of academic research and start-up activity, these being
            concentrated in areas where technology transfer is most
            efficient for business. The recipe for successful technology
            transfer will vary from one member state to the other and some
            creativity will be required to come up with the best solutions
            for areas that currently lack effective mechanisms. Analysis of
            the mechanisms that have already shown success should be the
            starting point.

       Public Perception: The widespread perception among both the
            business community and the general public that nanotechnology
            is still science fiction does little to encourage industry to
            take advantage of it. An appropriate appreciation of the
            realities and potential of nanotechnology is taking root more
            slowly in much of Europe than in the rest of the world. The
            European Union, the ENA and individual governments need to
            continue to work on improving the perception of nanotechnology
            among the business community and the public.

       Government Inaction: While some European countries are
            already taking proactive measures, many, especially in southern
            Europe, seem to be taking a wait and see approach or ignoring
            the area completely. Applying this philosophy to
            microelectronics and the Internet has led to a wide economic
            gap between technology-based and agrarian/tourism-based
            economies. Nanotechnology will be much more fundamental to
            economic performance than any previous technological revolution
            and will have a part to play even in predominantly agrarian
            economies. All governments within Europe should be encouraged
            to understand what nanotechnology can do for them.

       Education: From Korea to the Irish Republic there have been
            many examples in recent history of countries being rapidly
            transformed into technological powerhouses by virtue of a well-
            educated and relatively cheap work force. The agrarian/tourism-
            based economies of Europe do offer low labour costs and many
            offer attractive climates and lifestyles. Thanks to European
            Union efforts they also offer good infrastructure. The final
            piece in the jigsaw that might allow such economies to
            transition to being more technology-based is education--it is
            essential that a significant pool of technically highly
            educated workers is maintained throughout Europe. An increased
            emphasis on natural science training is urgently required for
            European institutions to be able to absorb the planned funding.
            Equally important are mechanisms for attracting more students
            into science-related subjects. This is a problem that is being
            tackled with some success in a few European countries but the
            lessons learned need to be heeded elsewhere.

       Communication: It is intrinsically difficult to get messages
            across in an economic block composed of many countries with
            different languages and cultures. However, researchers,
            entrepreneurs and the public at large must be made aware of the
            significant opportunities that are available to them in Europe
            so that they don't get the impression that the opportunities
            are greater elsewhere when this is not in fact the case.
            Combined efforts from the ENA, such as this report, and the
            European Union should be able to address this issue.

    Introduction
        A figure against which nanotechnology funding is often benchmarked
    is the budget of the U.S. National Nanotechnology Initiative. At first
    glance this appears to suggest that Europe's often quoted 1.3 billion
    over 4 years is tiny compared to the 2003 NNI budget of $710.2 million
    ( 0.72 billion). Our analysis indicates that the top level figures do
    not reveal the whole story, that many of these headline figures are in
    fact misleading, and that European nanotechnology spending may in fact
    be significantly higher than that of the U.S.
        Two criticisms are commonly levelled at endeavours such as this.
    One is that variations in funding mechanisms in different economic
    areas are complex, and varying definitions of nanotechnology add to
    this such that any comparison of numbers will always require certain
    assumptions and may be open to alternative interpretations. However,
    the comparisons can certainly give an indication of the approximate
    state of play.
        The other criticism is that putting numbers on nanotechnology
    spending is a pointless exercise, a little akin to putting numbers on
    spending for research into chemistry. Meaningful comparisons, the
    argument goes, would be at higher, application-oriented levels, such as
    cancer research, alternative energy, etc.
        The need for some sort of figure for nanotechnology spending, even
    if expressed as a range of figures in which the true figure probably
    falls, comes from the fact that businesses and academics look to these
    headline numbers and make decisions based upon them. If academics feel
    that the funding environment for nanotechnology is better in another
    region, they may be inclined to relocate. Equally, businesses will
    favour locations where grants may be more accessible and a greater pool
    of qualified individuals is present. For this reason, some attempt must
    be made to produce meaningful numbers.

    Global Nanotechnology Funding
    Europe

      Table 1. Final budget breakdown (in millions of euros) for the Sixth
          Framework Programme for 2002 through 2006. (Source. CORDIS).
    ------------------------------------------------------------------------
                 Commission's final budget                 June 2002 Final
    ------------------------------------------------------------------------
    INTEGRATING AND STRENGTHENING THE ERA
    1. Focusing and integrating Community research                    13345
    1.1 Thematic priorities                                           11285
    1.1.1 Life sciences, genomics and biotechnology                    2255
     for health
    1.1.2 Information society technologies                             3625
    1.1.3 Nanotechnologies and nanosciences, knowledge-                1300
     based multifunctional materials and new
     production processes and devices
    1.1.4 Aeronautics and space                                        1075
    1.1.5 Food quality and safety                                       685
    1.1.6 Sustainable development, global change and                   2120
     ecosystems
    1.1.7 Citizens and governance in a knowledge-based                  225
     society
    1.2 Specific activities covering a wider field of                  1300
     research
    Non-nuclear activities of the Joint Research                        760
     Centre
    2. Structuring the European Research Area                          2605
    3. Strengthening the foundations of the European                    320
     Research Area
    SPECIFIC PROGRAMME NUCLEAR ENERGY                                  1230
    ------------------------------------------------------------------------
        TOTAL                                                         17500
    ------------------------------------------------------------------------

    USA

     Table 2. Breakdown (in millions of dollars) of NNI spending for FY 2001
     (appropriated and actual), 2002 (appropriated) and 2003 (congressional
      request). Note: the `total' includes funding reported on 2/4/02 p/us
       funding in associated nanotechnology programmes. (Source: National
                           Nanotechnology Initiative)
    ------------------------------------------------------------------------
                                         FY2001          FY 2002    FY 2003
          Department/Agency      ----------------------  Appropr.   Request
                                   Appropr.    Actual     Total      Total
    ------------------------------------------------------------------------
    Department of Defense               110        123        180        201
    Department of Energy                 93      87.95       91.1      139.3
    Department of Justice                          1.4        1.4        1.4
    Department of Transportation                     0          2          2
     (FAA)
    Environmental Protection                         5          5          5
     Agency
    National Aeronautics and             20         22         46         51
     Space Administration
    National Institutes of               39       39.6       40.8       43.2
     Health
    National Institute of                10       33.4       37.6       43.8
     Standards and Technology
    National Science Foundation         150        150        199        221
    U.S. Department of                             1.5        1.5        2.5
     Agriculture
    ------------------------------------------------------------------------
        Total                           422     463.85      604.4      710.2
    ------------------------------------------------------------------------

    Asia

        Table 3. Estimated Japanese government nanotechnology R&D expenditures (in millions of dollars). (Source:
                      National Science Foundation, Nanoscale Science, Engineering and Technology).
    ----------------------------------------------------------------------------------------------------------------
                                                  1997      1998      1999      2000      2001      2002      2003
    ----------------------------------------------------------------------------------------------------------------
    Japan                                            120       135       157       245       465       750      1000
    ----------------------------------------------------------------------------------------------------------------

        Other Asian countries have also allocated large budgets to
    nanotechnology although many of these figures are not associated with
    clear timescales. However, given the increased purchasing power in many
    Asian countries, e.g. a researcher in China costs much less than one in
    Amsterdam, the funding is none the less significant.
        In the Japanese case, the annual 50 percent increases cast doubt
    upon the accuracy of these figures. While there is no question that
    funding will increase, increasing the number of researchers available
    to absorb this extra funding does not seem possible on an annual basis.
        Furthermore, given the difficulty of even agreeing on what
    constitutes nanotechnology, many of these numbers must be treated with
    caution. An example would be the recent assertion from the Taiwanese
    government that 800 companies in that country will soon be involved in
    nanoscience. This figure does not square with estimates from other
    sources of between 700 companies involved in nanotechnology (including
    multinationals) and 1000 nanotechnology start-ups worldwide (this
    latter figure quite likely uses an overly broad definition of
    nanotechnology).

    Table 4. Asian nanotechnology budgets (in millions of dollars). (Source:
                          CMP-Cientifica; Asia Pulse).
    ------------------------------------------------------------------------
                        Country                               2002
    ------------------------------------------------------------------------
            Japan                                                       750
            China                                                       200
            Taiwan                                                      111
            Korea                                                       150
            Singapore                                                    40
    ------------------------------------------------------------------------
                  Total                                                1251
    ------------------------------------------------------------------------

    EU Funding
        EU funding for nanotechnology is contained within the 6th Framework
    Programme, which runs from 2002 to 2006 and has an overall budget of
    17.5 billion. (The discussion will be focused on `thematic priorities',
    which is the area where nanotechnology can have a significant impact.
    Notice that almost a quarter of the budget goes to: Euratom;
    strengthening the European Research Area (ERA); and other, non-
    research-related, activities.)
        The official EU figure for nanotechnology, as quoted by Research
    Commissioner Philippe Busquin, is 700 million over 4 years, if
    nanotechnology is defined as only processes involving the manipulation
    of atoms and molecules. However, the EU does not have a standard
    definition of nanotechnology, preferring to use an upper limit of 50
    nm, or `exploitation of mesoscopic and quantum effects at the
    macroscale' or `the manipulation of atoms and molecules'.
        A more detailed analysis of EU spending is given below in table 5.
    Following detailed discussions with Commission officials, an upper and
    lower limit for the nanotech percentage was assigned to each thematic
    priority. It is immediately obvious that the headline figure of 1.3
    billion is in fact incorrect as thematic priority 1.1.3 is only partly
    dedicated to nanotechnology.

       Table 5. Budget percentage corresponding to Nanotechnology for each thematic priority of the 6th Framework
                   Programme for 2002-2006 (in millions of euros). (Source: EU Commission officials.)
    ----------------------------------------------------------------------------------------------------------------
                                                           June 2002      Min                     Max
                 Thematic priorities budget                  Final     (percent)     Total     (percent)     Total
    ----------------------------------------------------------------------------------------------------------------
    1.1.1 Life sciences, genomics and biotechnology for         2255         1.0        22.6         2.5        56.4
     health
    1.1.2 Information society technologies                      3625         7.0       253.8         9.0       326.3
    1.1.3 Nanotechnologies and nanosciences, knowledge-         1300        25.0       325.0        30.0       390.0
     based multifunctional materials and new production
     processes and devices
    1.1.4 Aeronautics and space                                 1075         0.2         2.2         0.2         2.2
    1.1.5 Food quality and safety                                685         0.2         1.4         0.2         1.4
    1.1.6 Sustainable development, global change and            2120         0.2         4.2         0.2         4.2
     ecosystems
    1.1.7 Citizens and governance in a knowledge-based           225         0.2         0.5         0.2         0.5
     society
    ----------------------------------------------------------------------------------------------------------------
        TOTAL                                                  11285                   609.7                   781.0
    ----------------------------------------------------------------------------------------------------------------

        While the above table justifies Commissioner Busquin's statement on
    EU spending, the figures should be treated as conservative. While
    institutions such as the European Space Agency have failed to match the
    NASA lead (and the $51 million 2003 budget) in applications of
    nanotechnology, it is clear that any materials-dependent applications
    such as those prominent in aerospace will have a nanotechnology
    component far higher than 0.2 percent. Food quality and safety are
    seeing packaging applications based on nanotechnology already on the
    market and a variety of sensor technologies look set to hit the market
    soon, which also argues that the nanotechnology component in research
    would be significantly higher than 0.2 percent. Sustainable development
    is equally an area where recent nanotechnological developments show
    significant promise. Life sciences, genomics and health are already
    seeing major impacts from microtechnology, with nanotechnology looking
    to play a larger role very soon, in areas ranging from bioanalysis to
    drug delivery.
        In fact, some EU officials expect the percentage of nanotech across
    all items to be as high as 30 percent, as taken in the `nano inside'
    scenario outlined below.
        So there is good reason to believe that the 0.7 billion figure
    given in the table above is a serious underestimate, and that the 30
    percent figure is probably a better reflection, although this may, of
    course, be optimistic.
        The aim of the FP6 is to produce breakthrough technologies that
    directly benefit the EU, whether economically or socially. In order to
    achieve this, the research programme contains broad thematic areas,
    such as health, which are then broken down into sub-components for
    research funding. Instead of funding nanotechnology and nanoscience
    directly, an issue which is addressed in the nanotechnology thematic
    priority, the focus is on breakthroughs. By focusing on breakthroughs,
    nanotech funding is targeted at applications rather than pure science.
    Similar applications are being pursued in government programmes in the
    U.S. and in Europe; the fundamental difference between the European
    approach and that of the U.S. and some other countries is the way the
    applications are grouped--the EU structure makes considerations of
    benefits the priority by embodying them in the highest level of the
    funding structure. The NNI in the U.S. starts with a nanotechnology
    budget, then apportions this to various departments representing
    thematic areas.
        In order to decode the European Union's spending plans on
    nanotechnology three scenarios have been examined. While none of these
    approaches is entirely adequate to explain the complexities of European
    funding, they do at least allow an approximate level of European
    commitment to nanotechnology to be determined.

    Scenario 1--`Nano Inside'
        Applying the view of some within the EC who believe that
    nanoscience and technology will play a large part in producing the
    breakthrough technologies of FP6, for example in drug delivery and
    biodetection, leads to the assumption by certain programme officials
    that 30 percent of all spending will be nanotechnology-related. This
    fits well with NNI estimates, which reach the fabled $1 trillion market
    size for products and services affected by nanotechnology by assuming
    that nanotechnology will have a part to play in almost everything.
        This 30 percent estimate for the nanotechnology component of the
    funded projects for FP6 is an average across all the thematic
    priorities and is described as `nano inside'.
        Of course, the true nanotechnology component may be higher or lower
    than 30 percent and it will not be possible to extract it until a final
    review of the FP6 is complete after the end of the programme.
        If this 30 percent figure is applied to the European funding figure
    of 11.28 billion, then 3.4 billion, or 850 million a year, may well be
    spent on nanotechnology.

    Scenario 2--Mobilised Capital
        Many EU-funded programmes are not entirely supported by the EU. In
    the case of university research 100 percent of the marginal cost, e.g.
    for additional researchers or equipment, but not for those already in
    place, is funded, but for many other projects matching funds are
    provided by national governments or participating companies.
        The main instruments of FP6 are integrated projects (IP) and
    networks of excellence (NoE) proposed under FP6. For each NoE the EU
    funds up to 50 percent of the project. For each IP the EU only funds up
    to 25 percent of the project, requiring a minimum national contribution
    of 75 percent. Given the 400 million allocated for IPs and the 300
    million allocated for NoEs, the amount of capital released by EU
    funding may be in the region of 2.4 billion, or 600 million a year.
        Taking another EU definition, that of `the manipulation of atoms
    and molecules', which commission officials estimate to be around 1
    billion, would give a mobilised capital figure of 3.43 billion or 857
    million per year.

    Scenario 3--Pro-rata Comparison
        There are several fundamental differences between the EU approach
    and that of the U.S. and Japan. While a detailed analysis of U.S. and
    Japanese funding mechanisms is beyond the scope of this report, an
    appreciation of these differences changes the relative balance of
    funding.
        As previously discussed, the EU structure makes considerations of
    benefits the priority by embodying them in the highest level of the
    funding structure. Another fundamental difference is that rather than
    assigning a fixed budget for nanotechnology in health care, as the NNI
    is doing via the National Institutes of Health (NIH), the EU assigns a
    budget for health.
        A further difference arises as the EU funding only covers marginal
    cost, i.e. the extra funding required for researchers, equipment etc.
    The cost of infrastructure and that of paying academics already in
    place is borne by the national governments (but will generally not be a
    part of the budget for their own nanotechnology initiatives). This is
    in marked contrast to the U.S. system where the NNI generally wholly
    supports the institutes dedicated to nanotechnology. In fact, the
    National Science Foundation funding includes almost 10 percent of its
    budget for research infrastructure.
        However, the most significant difference is that the FP budget
    represents about 4 percent of the total European public research
    budgets (see, for example, ftp://ftp.cordis.lu/pub/nanotechnology/docs/
    nanoscience_presentation_022002_en.ppt).
        This is, however, an average figure. In high-technology areas such
    as aerospace, the figure is closer to 20 percent, while in others, such
    as cancer research, it is substantially less than 4 percent. Thus,
    assuming a similar nanotech proportion in other budgets, and an EU
    contribution of 10-20 percent, the conservative estimate of 700 million
    over 4 years could result in spending of between 3.5 billion and 7
    billion over 4 years, or 0.88-1.75 billion per year.
        This figure would, of course, need to be compared with a U.S.
    figure that included funding from individual states. However, current
    U.S. state spending suggests it may exceed the NNI budget by a factor
    of two, not, as in the EU, by a factor of 10-25. In fact, to date,
    total nanotechnology funding by individual U.S. states has so far not
    approached the levels allocated nationally by the NNI.

       Table 6. Total EU nanotechnology funding for the period 2002-2006.
       Comparison of the three described scenarios (in billion of euros).
    ------------------------------------------------------------------------
                                                     Mobilised     Pro-rata
                 Scenario              Nano Inside    Capital     Comparison
    ------------------------------------------------------------------------
    EU Funding (Total FP6)...........          3.4     2.4-3.43      3.5-7.0
    EU Funding per year..............         0.85    0.60-0.86    0.88-1.75
    ------------------------------------------------------------------------

        It is also arguable that by targeting some funding to specific
    thematic priorities, in addition to providing funding specifically for
    nanotechnology, which is probably necessary to effectively tackle the
    new cross-disciplinary issues it presents, EU funding may prove more
    effective in terms of results per dollar or euro spent.
        Given the huge differences between the EU and U.S. funding
    programmes, a direct comparison between them is difficult to make. An
    analysis of European researchers and patents by Commission official Dr.
    Ramon Compano, published in the journal Nanotechnology (volume 13,
    number 3, June 2002) indicates that European researchers are performing
    as well as their U.S. counterparts, with apparently far less funding.
    This is a further indication that the headline figures are not telling
    the whole story.

    Conclusions
        On balance, it looks as if Europe has a significant edge at the
    moment. However, it should be remembered that since discussions about
    FP6 started the U.S. NNI budget has almost doubled. Once the economic
    benefits of U.S. funding begin to be felt, whether in new company
    start-up activity, or progress towards military or social goals, U.S.
    funding is expected to increase rapidly. In addition, the FP6 budget is
    now fixed until 2006, at which point the balance may have changed
    dramatically. This is where the initiatives of individual European
    governments become important, as outlined in the recommendations at the
    start of this report.
        While European funding appears to be adequate to match the U.S. and
    Japanese initiatives, it is simplistic to divide the funding figures by
    4. Simply turning on the funding will cause problems unless the
    scientific infrastructure is there to absorb that funding. Europe
    cannot just suddenly double the number of physics students being
    produced because the funding is there for their PhD and post-doctoral
    work. We will see more of an exponential ramp-up.
        The EU, national governments and organisations such as the ENA need
    to continue to focus on: improving the business climate in member
    states; developing strategies for improving technology transfer and
    increasing the number of students embarking on scientific training, to
    ensure an adequately trained labour pool; ensuring that public and
    business perception of nanotechnology is realistic; encouraging local
    governments that have not yet recognised the importance of
    nanotechnology to do so; making sure the opportunities in Europe are
    adequately communicated; and ensuring that national governments have
    nanotechnology R&D policies that allow a more rapid reaction to
    changing opportunities than is possible from the Europe-wide
    programmes.
        While much of the headline news is made by the EU, we expect
    European funding will be picked up where it goes with the grain of
    member states' own programmes. Given that EU funding represents only 4
    percent of Europe's total, the efforts of member states are likely to
    be the deciding factor in the eventual competitiveness of European
    funding.