Advanced Technology Program: Inherent Factors in Selection Process Could
Limit Identification of Similar Research (Letter Report, 04/24/2000,
GAO/RCED-00-114).

Pursuant to a congressional request, GAO reviewed the National Institute
of Standards and Technology's Advanced Technology Program (ATP),
focusing on: (1) whether, in the past, ATP had funded projects with
research goals that were similar to projects funded by the private
sector; and (2) if such cases were identified, whether ATP's award
selection process ensures that such research would not be funded in the
future.

GAO noted that: (1) the three completed ATP-funded projects, which were
approved for funding in 1990 and 1992, addressed similar research goals
to those already funded by the private sector; (2) the projects included
an on-line handwriting recognition system, a system to increase the
capacity of existing fiber optic cables for the telecommunications
industry, and a process for turning collagen into fibers for human
prostheses use; (3) in the case of the handwriting recognition project,
ATP provided $1.2 million to develop a system to recognize cursive
handwriting for pen-based (i.e., without a keyboard) computer input; (4)
GAO identified several private firms that were conducting similar
research on handwriting recognition at approximately the same time the
ATP project was funded; (5) in fact, this line of research began in the
late 1950s; (6) in addition, GAO identified multiple patents, as early
as 5 years prior to the start of the ATP project, in the field of
handwriting recognition; (7) GAO found similar results in the other two
projects; (8) two inherent factors in ATP's award selection process--the
need to guard against conflicts of interest and the need to protect
proprietary information--make it unlikely that ATP can avoid funding
research already being pursued by the private sector in the same time
period; (9) these factors, which have not changed since 1990, make it
difficult for ATP project reviewers to identify similar efforts in the
private sector; (10) for example, to guard against conflicts of
interest, the program uses technical experts who are not directly
involved with the proposed research; (11) their acquaintance with
on-going research is further limited by the private sector's practice of
not disclosing its research efforts or results so as to guard
proprietary information; and (12) as a result, it may not be possible
for the program to ensure that it is consistently not funding existing
or planned research that would be conducted in the same time period in
the absence of ATP financial assistance.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  RCED-00-114
     TITLE:  Advanced Technology Program: Inherent Factors in Selection
	     Process Could Limit Identification of Similar
	     Research
      DATE:  04/24/2000
   SUBJECT:  Research and development
	     Competition
	     Eligibility determinations
	     Technology transfer
	     Joint ventures
	     Redundancy
	     Internal controls
	     Grant award procedures
IDENTIFIER:  NIST Advanced Technology Program

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GAO/RCED-00-114

Appendix I: Scope and Methodology

20

Appendix II: Communication Intelligence Corporation Project
Summary

23

Appendix III: Accuwave Corporation Project Summary

27

Appendix IV: Tissue Engineering, Inc., Project Summary

31

Appendix V: Comments From the Department of Commerce

35

Appendix VI: GAO Contact and Staff Acknowledgments

39

Figure 1: The Number of Patents Issued from 1985 Through
1999 for a Handwriting Recognition System 9

Figure 2: The Number of Patents Issued from 1985 Through
1999 for Wavelength Division Multiplexing Systems and Components 11

Figure 3: The Number of Patents Issued from 1985 Through
1999 Related to Tissue Engineering 13

ATP Advanced Technology Program

CIC Communication Intelligence Corporation

GAO General Accounting Office

MIT Massachusetts Institute of Technology

NIST National Institute of Standards and Technology

PTO U.S. Patent and Trademark Office

SEB Source Evaluation Board

TE Tissue Engineering

WDM wavelength division multiplexing

Resources, Community, and
Economic Development Division

B-283784

April 24, 2000

The Honorable F. James Sensenbrenner
Chairman
Committee on Science
The Honorable John R. Kasich
Chairman
Committee on the Budget
House of Representatives

The Advanced Technology Program (ATP), administered by the National
Institute of Standards and Technology (NIST), was established to support
research that accelerates the development of high-risk technologies, with
the potential for broad-based economic benefits for the nation. The Omnibus
Trade and Competitiveness Act of 1988 (P.L.100-418), which established ATP,
states that ATP program administrators should ensure that they are not
funding existing or planned research that would be conducted in the same
time period in the absence of ATP financial assistance. ATP is a competitive
cost-sharing program that since 1990 has funded 468 projects at a cost of
about $1.5 billion in federal matching funds. As of December 1999, 236
projects had been completed.

Research can provide both private benefits, which accrue to the owners of
the research results, and social benefits, which accrue to society as a
whole. In some instances, the private sector does not fund research that
would be beneficial to society because doing so might not provide an
adequate return on firms' investments. In other words, the market is unable
to fund certain types of research either at all or at the most desirable or
optimal level, resulting in what is commonly referred to as "market
failure." To address this situation, the federal government, through tax
credits or direct public funding, supports research that has very broad
social benefits, such as basic research and research focused on developing
technologies in areas such as public health and nutrition, energy
conservation, and environmental protection. However, there is a continuing
debate over whether the private sector has sufficient incentives to
undertake research on high-risk, high-payoff emerging and enabling
technologies without government support, such as ATP.

Because of your concern that ATP may have funded research that was similar
to research already being funded by the private sector, you asked us to
review the NIST ATP document entitled Performance of Completed Projects,
Status Report Number 1, dated March 1999, which provided the status of the
first 38 completed projects. As agreed with your offices, we determined (1)
whether, in the past, ATP had funded projects with research goals that were
similar to projects funded by the private sector and (2) if such cases were
identified, whether ATP's current award selection process ensures that such
research would not be funded in the future. To determine whether ATP has
funded projects similar to private sector projects, we chose 3 of the 38
completed projects, each representing a different technology
sector--biotechnology; electronics; and information, computers, and
communications. These three technology sectors represent 26 of the 38
completed ATP projects, or 68 percent. We analyzed the ATP project files and
held discussions with industry and academic experts, technical reviewers,
and award recipients to assist in our examination of these projects. We also
conducted patent searches on the technical areas associated with each of the
three projects. Our objective was not to provide an evaluation of the
quality of the research funded by ATP or the private sector nor the impact
these projects may or may not have had on their respective industries. To
address the second objective, we reviewed ATP's current award selection
process. We did not review the overall management of the program. (See app.
I for a detailed discussion of our scope and methodology.) We performed our
work from October 1999 through April 2000 in accordance with generally
accepted government auditing standards.

The three completed ATP-funded projects, which were approved for funding in
1990 and 1992, addressed similar research goals to those already funded by
the private sector. The projects included an on-line handwriting recognition
system, a system to increase the capacity of existing fiber optic cables for
the telecommunications industry, and a process for turning collagen into
fibers for human prostheses use. In the case of the handwriting recognition
project, ATP provided $1.2 million to develop a system to recognize cursive
handwriting for pen-based (i.e., without a keyboard) computer input. We
identified several private firms that were conducting similar research on
handwriting recognition at approximately the same time the ATP project was
funded. In fact, this line of research began in the late 1950s. In addition,
we identified multiple patents, as early as 5 years prior to the start of
the ATP project, in the field of handwriting recognition. We found similar
results in the other two projects.

Two inherent factors in ATP's current award selection process--the need to
guard against conflicts of interest and the need to protect proprietary
information--make it unlikely that ATP can avoid funding research already
being pursued by the private sector in the same time period. These factors,
which have not changed since 1990, make it difficult for ATP project
reviewers to identify similar efforts in the private sector. For example, to
guard against conflicts of interest, the program uses technical experts who
are not directly involved with the proposed research. Their acquaintance
with on-going research is further limited by the private sector's practice
of not disclosing its research efforts or results so as to guard proprietary
information. As a result, it may not be possible for the program to ensure
that it is consistently not funding existing or planned research that would
be conducted in the same time period in the absence of ATP financial
assistance.

ATP, which began in fiscal year 1990, was initiated to fund high-risk
research and development (R&D) projects with broad commercial and societal
benefits that would not be undertaken by a single company or group of
companies, either because the risk was too high or because the economic
benefits of success would not accrue to the investors. ATP is viewed as a
mechanism for fostering investment in areas in which social returns would
exceed private returns. ATP has addressed other opportunities to achieve
broader social goals such as small business participation, as well as the
establishment of joint ventures--for high-risk technologies that would be
difficult for any one company to justify, because, for example, the benefits
spread across the industry as a whole. Thus, ATP is seen by some as a means
of addressing market failure in research areas that would otherwise not be
funded, thereby facilitating the economic growth that comes from the
commercialization and use of new technologies in the private sector.
Advocates of the program believe that the government should serve as a
catalyst for companies to cooperate and undertake important new work that
would not have been possible in the same time period without federal
participation. Critics of the program view ATP as industrial policy, or the
means by which government rather than the marketplace picks winners and
losers.

ATP's cooperative agreements are made through announced annual competitions.
The ATP provides multiyear funding to single companies and to industry-led
joint ventures. The proposal review and selection process is a multistep
process based on NIST regulations. In general, these steps include: a
preliminary screening, technical and business reviews, semifinalist
identification, oral reviews, ranking, and final selection. At the beginning
of each round of ATP competitions, NIST establishes Source Evaluation Boards
(SEBs) to ensure that all proposals receive careful consideration. Each SEB
is comprised of NIST technical experts as well as outside specialists with
backgrounds in business and economics. ATP supplements the SEBs with outside
technical reviewers, generally federal government experts in the specific
industry of the proposal. Independent business experts are also hired on a
consulting basis, including high-tech venture capitalists, people who teach
strategic business planning, retired corporate executives from large and
small high-tech businesses, as well as economists and business development
specialists. All SEB members and outside reviewers must sign nondisclosure
statements, agree to protect proprietary information, and certify that they
have no conflicts of interest.

As part of the proposal evaluation process, ATP uses the external reviewers
to assess the technical and business merit of the proposed research. Each
proposal is sponsored by both technical and business SEB members, whose
roles include identifying reviewers, summarizing evaluative comments, and
making recommendations to the SEB. The SEB evaluates the proposals, selects
the semifinalists, conducts oral interviews with semifinalists, and ranks
the semifinalists. A source selecting official makes the final award
decisions based on the ranked list of proposals from the SEB.

The three projects that we reviewed received funding through the ATP
competitions announced in 1990 and 1992. In those years, the selection
criteria included: scientific and technical merit, potential broad-based
benefits, technology transfer benefits, the proposing organization's
commitment level and organizational structure, and the qualifications and
experience of the proposing organization's staff. Each of the five selection
criteria was weighted at 20 percent. Today, these same selection criteria
are used but are grouped into two categories, each weighted 50 percent. The
"Scientific and Technical Merit," category addresses a variety of issues
related to the technical plan and the relevant experience of the proposing
organization. The second category, "Potential for Broad-Based Economic
Benefits," addresses the means to achieving an economic benefit,
commercialization plans, as well as issues related to the proposer's level
of commitment, organizational structure, and management plan. Technical and
business reviewers complete documentation called technical and business
evaluation worksheets addressing various aspects of these criteria.

the Private Sector

The three completed projects that we reviewed addressed research goals that
were similar to goals that the private sector was addressing at about the
same time. The three projects were funded in the early 1990s, and our
efforts to locate similar research involved identifying, retrospectively,
research that we now know was going on at that time. Each of the three
projects was from a different sector of technology--computers, electronics,
and biotechnology. The projects include (1) an on-line handwriting
recognition system for computer input, (2) a system to increase the capacity
of existing fiber optic cables for the telecommunications industry, and (3)
a process for turning collagen into fibers for human prostheses use. (Apps.
II through IV describe each of the ATP projects and the private sector
research projects whose goals were similar to the ATP-funded projects.)

Both the ATP project and several private sector projects had a similar
research goal of developing an on-line system to recognize natural or
cursive handwritten data without the use of a keyboard. This technology
would make computers more useful where keyboard use is limited by physical
problems or in situations where using a keyboard is not practical. On-line
handwriting recognition means that the system recognizes handwritten data
while the user writes. The primary technical problem in handwriting
recognition is that writing styles vary greatly from person to person
depending upon whether the user is in a hurry, fatigued, or a variety of
other factors. While the technology for obtaining recognition of constrained
careful writing or block print writing was commercially available, systems
for cursive writing recognition were not commercially available because of
the greater handwriting variability that was encountered.

The ATP project we reviewed sought to develop an on-line natural handwriting
recognition system that was user-independent and able to translate natural
or cursive handwriting. Communication Intelligence Corporation (CIC) was the
award recipient. CIC used its ATP funding of $1.2 million from 1991 to 1993
to build its own algorithms 1 and models for developing its handwriting
recognition system. During the project, CIC created a database that includes
thousands of cursive handwriting samples and developed new recognition
algorithms. Some of this technology has been incorporated into a registered
software product that has the ability to recognize cursive writing in
limited circumstances.

According to the experts we interviewed, as well as literature and patent
searches, several companies were attempting to achieve a similar goal of
handwriting recognition through their research around the same time that the
ATP project received funding. Some of the key players in the private sector
conducting research on cursive handwriting recognition included Paragraph
International (in collaboration with Apple Computer) and Lexicus (which
later became a division of Motorola). For example, Apple licensed a cursive
handwriting recognition system from a Soviet company, Paragraph
International, according to articles published in computer magazines in
October 1991. According to these sources, this technology provided Apple
with a foundation for recognizing printed, cursive, or block handwritten
text.

Another indication of research of a similar goal appeared in the October
1990 edition of PC Week, which reported that "handwriting recognition is an
emerging technology that promises increased productivity both for current
microcomputer owners and for a new breed of users armed with hand-held
`pen-based' computers." Similarly a technical journal article indicated that
there was renewed interest in the 1980s in this field of on-line handwriting
recognition, from its advent in the 1960s, because of more accurate
electronic tablets, more compact and powerful computers, and better
recognition algorithms.2

Moreover, as shown in figure 1, according to the U.S. Patent and Trademark
Office's (PTO) database, over 450 patents3 were issued on handwriting
recognition software, concepts, and related products from 1985 through 1999,
indicating that research of a similar goal was being conducted around the
time of the ATP project. Given the fact that it can take many years between
the time a research project takes place and the time that an outcome is
realized, this time period for a patent search allowed us to determine
whether there was research ongoing during the time of the ATP project. The
dates of the patents actually occurred sometime after the research was
conducted. And, as we reported in a prior report,4 the time between the
point when a patent application is filed until the date when a patent is
issued, or the application is abandoned, ranged from 19.8 months to 21
months, adding additional time to when the research was done.

Figure 1: The Number of Patents Issued from 1985 Through 1999 for a
Handwriting Recognition System

Source: Prepared by GAO using PTO's data.

Another ATP project we reviewed, which proposed to develop a system to
increase the capacity of existing fiber optic cables for the
telecommunications industry, also had a similar goal to that of research in
the private sector. At the same time, firms in the private sector were
attempting to increase the number of light signals that can be transmitted
through a single strand of fiber optic cable using a technology called
wavelength division multiplexing (WDM). 5 In the 1980s, telephone companies
laid fiber optic cables across the United States and other countries to
create an information system that could carry significantly more data than
the copper wires they replaced. Tremendous increases in cable traffic,
primarily from the Internet, have crowded these cables. WDM technology was
aimed at providing a cost-effective alternative to the expensive option of
installing additional fiber optic cables.

Accuwave Corporation (Accuwave) was the ATP award recipient. Accuwave used
its ATP funding of approximately $2 million from March 1993 through March
1995 to develop a wavelength division multiplexing system that would
substantially increase the number of signals that could be transmitted
through a single optical fiber strand, using the concept of volume
holography. Volume holography uses holograms to direct multiple light
signals simultaneously through a single fiber strand. Accuwave was able to
make improvements on these issues but not enough to fully develop and market
a successful WDM system for the telecommunications market. In 1996, a
competitor beat Accuwave to the market. After the completion of the ATP
project, Accuwave filed for bankruptcy protection due to its inability to
successfully commercialize a wavelength division multiplexing system.

Other private firms were involved in research with a similar goal of
increasing the capacity of fiber optic cable at about the same time as
Accuwave was conducting its research. Conceptual research on such systems
dates back to the early 1980s, but development and commercialization did not
flourish until the mid- to late 1990s. Bell Labs (now Lucent Technologies),
Nortel Networks, and Ciena Corporation, among others, were considered some
of the major competitors in the industry. In the early 1990s, these firms
were attempting to develop WDM technology using different methods and
materials. For example, Ciena Corporation developed a system that
incorporated fiber-Bragg gratings, which are filters embedded directly onto
fiber optic cable that help to separate multiple light signals through a
single fiber strand.

We also found an indication of WDM-related research through a review of
issued patents. According to PTO's database, over 2,000 patents were issued
related to wavelength division multiplexing components, systems, and
concepts from 1985 through 1999. As shown in figure 2, the patents issued
ranged from 10 patents in 1985 to 493 in 1999.

Figure 2: The Number of Patents Issued from 1985 Through 1999 for Wavelength
Division Multiplexing Systems and Components

Source: Prepared by GAO using PTO's data.

Both the ATP project and private sector projects we identified in the tissue
engineering field had similar broad research goals of developing biological
equivalents for defective tissues and organs utilizing diverse technical
approaches. ATP's project proposed procedures for extracting, storing,
spinning, and weaving collagen (the main constituent of connective tissue
and bones) into fibers suitable for human prostheses that could induce the
body's cells to regenerate lost tissue. Tissue Engineering, Inc., received
ATP's award of about $2 million for use over the years 1993 through 1996.
The company's long-term and yet unrealized goal is to transplant these
prostheses into humans, after which the collagen framework, or scaffold,
would induce the growth and function of normal body cells within it,
eventually remodeling lost human tissue and replacing the scaffold.

Within the very innovative field of tissue engineering, however, many
competitors were attempting to achieve similar broad research goals.
Organogenesis, the Collagen Corporation, Integra LifeSciences, Advanced
Tissue Sciences, Genzyme Tissue, Osiris Therapeutics, Matrix
Pharmaceuticals, and ReGen Biologics are key players in the market to
develop structures that could replace or regenerate cells, tissues, and
organs such as skin, teeth, orthopedic structures, cartilage, and valves. A
number of these companies have subsequently received ATP awards. In
addition, universities and medical schools have researchers investigating
the many possibilities to engineer human tissues, and eventually complex
organs, such as the liver, pancreas, and heart. According to one expert,
there is a great deal of competition within the field of tissue engineering.

Although the Tissue Engineering, Inc., research focused on the use of
collagen as the basis for these structures, other companies were pursuing a
variety of technical approaches for addressing the goal of developing
biological equivalents for defective tissues and organs. In addition to
research in collagen, other companies and researchers have also been
attempting to create human tissues and organs from other biological
materials, synthetics, and hybrid products, which are both biologic and
synthetic. For example, researchers from the Massachusetts Institute of
Technology (MIT) developed an artificial skin product using collagen and a
natural polymer. Several companies have since developed comparable products.
In 1986, researchers from MIT and a hospital in Massachusetts began
inserting cells into scaffolds created of biodegradable polymer. As the
cells multiply, tissues form. The magazine BusinessWeek reported this
concept as "an elegantly simple concept that underlies most engineered
tissue."6 Two competitors, Integra LifeSciences and Organogenesis, reported
that they were also doing work on the use of collagen in various
applications. Although their technical approaches were different than the
ATP project, the broad research goals were similar.

In addition to our discussions with experts and literature searches, patent
research shows that there was activity related to the field of tissue
engineering prior to and during the ATP project. According to a search done
on the PTO website, at least 370 patents were issued related to cell
culturing, scaffolding or matrix development, and tissue engineering from
1985 through 1999. Experts have also indicated that there are several
patents related to the field, with a considerable amount of overlap in the
technologies described in those patents. Figure 3 depicts patents issued for
research related to tissue engineering from 1985 through 1999.

Figure 3: The Number of Patents Issued from 1985 Through 1999 Related to
Tissue Engineering

Source: Prepared by GAO using PTO's data.

Similar Research

Two factors in ATP's current award selection process could result in ATP's
funding research similar to research that the private sector would fund in
the same time period. These two factors are inherent in the review process
and limit the information the reviewers have on similar private sector
research efforts. Due to conflict-of-interest concerns, technical reviewers
are precluded from being directly involved with the proposed research,
making them less likely to know about all the research in an area. Also, the
information available about private sector research is limited because of
the private sector practice of not disclosing research results. Until a
patent is issued, a private sector firm generally publishes very few details
about the research to protect proprietary information. Therefore, it is
difficult for the reviewers to identify other cutting edge research.

Similar Research

ATP selection officials rely on outside technical reviewers to evaluate a
proposal's scientific and technical merit. All reviewers must certify that
they have no conflicts of interest. To minimize possible conflicts of
interest, the technical reviewers are generally federal government employees
who are experts in the specific technology of the research proposal but are
not directly involved with the proposed research area. Although this
approach helps to guard against conflict of interest, it has inherent
limitations on the program's ability to identify similar research efforts.
The technical reviewers rely on their own knowledge of research underway in
the private sector. One of the technical reviewers we interviewed said that
he did not personally know of other companies that were doing similar work.
However, he believed that it was unlikely that there were not dozens of
others working on the same issue.

Research

ATP reviewers are significantly limited in their ability to identify similar
research efforts by an inherent lack of information on private sector
research. Although ATP officials use several sources such as colleagues,
conferences and symposia, and current technical literature, to try to
identify research efforts conducted by the private sector and the federal
government, this information is often proprietary. Most of the private
sector and university experts we consulted agreed that it can be very
difficult to identify the specific research that private sector firms are
conducting, especially considering the competitive nature of most
industries. The early release of information on a company's research could
be costly to the firm. If a competing firm could determine the nature and
progress of another company's research, it could help the competitor to
develop and commercialize an identical or higher-quality product before the
other firm. At the very least, the early release of research information by
a firm can give competitors an idea as to the focus of the firm's strategic
plan. Thus, many firms are very careful about releasing detailed information
related to research and development activities they are conducting.

Our retrospective look at the three ATP research projects showed that their
goals were similar to research goals already being funded by the private
sector. Looking at the process that ATP currently uses to select projects,
we found two inherent factors--the need to guard against conflicts of
interest and the need to protect proprietary information--that limit ATP's
ability to identify similar research efforts in the private sector. These
two factors have not changed since the beginning of the program. We
recognize the valid need to guard against conflicts of interest and to
protect proprietary information; thus, we are not recommending any changes
to the award selection process. However, we believe that it may not be
possible for the program to ensure that it is consistently not funding
existing or planned research that would be conducted in the same time period
in the absence of ATP financial assistance.

We provided a draft of this report to the Department of Commerce for its
review and comment. The Department's National Institute of Standards and
Technology (NIST), which administers the Advanced Technology Program,
disagreed with both the methodology that we used and the conclusions that we
reached in the draft report. NIST's disagreement focused on six areas, which
are discussed in the following sections. NIST's comments and an enclosure
describing the technical approaches of the three ATP projects that we
reviewed are in appendix V.

First, NIST states that the report implies that the federal government
should not fund research that shares the same overall goal as research
funded outside of the government. We disagree. NIST believes that it is
appropriate for the federal government to fund research projects that have
similar research goals to research funded by the private sector as long as
that research has an innovative technical approach and has the potential for
broad-based economic benefits. However, the Omnibus Trade and
Competitiveness Act, which established the ATP, states that ATP program
administrators should ensure that they are not funding existing or planned
research that would be conducted in the same time period in the absence of
ATP financial assistance.

Second, NIST believes that our report failed to understand and address a
central aspect of the ATP: that it selects projects for innovative,
high-risk technical approaches for break-through solutions to challenging
problems and that these technical innovations offer broad potential national
benefits. To the contrary, throughout the report we state that the goal of
the program and the criteria for project selection support innovative
research that accelerates the development of high-risk technologies with the
potential for broad-based economic benefits for the nation. Furthermore, our
report states that advocates of the program believe that the government
should serve as a catalyst for companies to cooperate and undertake
important new work that would not have been possible in the same time period
without federal participation.

Third, NIST states that our report fails to define or address the
distinction between funding projects with similar "research goals" versus
funding projects with "unique project-specific objectives and technical
approaches." We disagree. Throughout our report we distinguish between broad
research goals and specific technical approaches. In determining whether, in
the past, ATP had funded projects with research goals that were similar to
projects funded by the private sector, our report identifies many
competitors who were attempting to achieve similar broad research goals to
those of the three ATP-funded research projects, albeit using different
technical approaches. Our report includes descriptions of the unique
technical approaches of the ATP-funded projects and states that the other
firms were attempting to develop these technologies using different methods
and materials. NIST included, as an enclosure to its comments, a description
of the technical approaches of each of the projects, which we believe
generally mirrors much of our descriptions of the projects, included in
appendixes II through IV. While the ATP-funded projects had unique technical
approaches, nevertheless, the broad research goals were similar to research
goals of projects being funded by the private sector.

Fourth, NIST states that our report does not discuss the competitive value
of having differences in the technical approaches of the research within the
broad research fields being addressed. NIST further noted that the report
does not mention the national benefits, which would result from accelerating
the high-risk, yet critical technology resulting from specific projects. We
agree that there could be value to funding a number of technical approaches
or to accelerating critical technologies. However, if ATP is to ensure that
it is not funding existing or planned research that would be conducted in
the same time period in the absence of ATP financial assistance, the fact
remains that we found that the three ATP-funded projects that we reviewed
addressed similar research goals to those already funded by the private
sector. If the private sector is funding any of the technical approaches
toward the broad research goal, the benefits resulting from these efforts
may be realized without federal funding.

Fifth, NIST states that in conducting our review we "hand-picked" 3 of 38
completed projects, "presumably with the intent of making the strongest
possible argument," and that we used these projects to draw conclusions that
are unreasonably far reaching. This assertion is not correct. We selected
these projects without prior knowledge of the industries or the
technological approaches of the research projects. We chose three projects
each representing a different technology sector. These three technology
sectors represent 26 of the 38 completed ATP projects, or 68 percent. We
have added additional information to explain the scope and methodology used
in our case study approach. Our conclusion based on the review of the three
projects is that the research goals of these three projects were similar to
research goals already being funded by the private sector. To assist in our
examination of these projects, we held discussions with outside experts, as
well as with ATP technical reviewers and Source Evaluation Board members.
These outside experts helped us to understand the industries within which
each of the projects selected as case studies were operating and provided
their professional assessment of whether similar research to that undertaken
by the ATP award recipient was ongoing. We identified two inherent factors
in ATP's current award selection process--the need to guard against
conflicts of interest and the need to protect proprietary information--that
led us to the conclusion that it may not be possible for the program to
ensure that it is consistently not funding existing or planned research that
would be conducted in the same time period in the absence of ATP financial
assistance. This conclusion was based principally on our analysis of the
current award selection process supplemented by our analysis of the three
ATP-completed projects.

Sixth, NIST stated that if we "were to review all 199 ATP completed projects
to date, the GAO might still have come to the same conclusions, i.e. that
the research goals may have been similar to those funded by the private
sector." However, NIST states that even a review of all of the completed
projects "would utterly fail to capture the impact of the ATP." Our
objective was not to provide an evaluation of the quality of the research
funded by ATP or the private sector nor the impact these projects may or may
not have had on their respective industries. We have added this
clarification to the report. Our review of completed projects was limited to
identifying whether, in the past, ATP had funded projects with research
goals that were similar to projects funded by the private sector.

As arranged with your offices, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days after
its issuance date. At that time, we will send copies of this report to the
appropriate House and Senate committees; interested Members of Congress; the
Honorable William M. Daley, Secretary of Commerce; Raymond G. Kammer,
Director, National Institute of Standards and Technology; and Alan Balutis,
Director, Advanced Technology Program.

If you have any questions regarding this report, please contact me at (202)
512-3841. Key contributors to this report are listed in appendix VI.

(Ms.) Gary L. Jones
Associate Director, Energy, Resources,
and Science Issues

Scope and Methodology

To determine whether the Advanced Technology Program (ATP) had funded
projects with research goals similar to projects being funded by the private
sector, we examined 3 of 38 completed ATP projects from ATP's status report
entitled Performance of Completed Projects, dated March 1999. These projects
were chosen from the following technology sectors: information, computers,
and communication; electronics; and biotechnology. These three technology
sectors represent 26 of the 38 completed ATP projects, or 68 percent. We
consulted with ATP officials at the beginning of our review regarding which
technology sectors would provide a useful framework for our review. These
officials supported our selection of the three industrial sectors and gave
us information showing that they had each received increasing numbers of
awards, since the start of the ATP program. ATP funded the selected projects
as a result of two different competitions held in 1990 and 1992. We
rank-ordered all of the projects within the three technology sectors by
dollar value. All three selected projects had received a medium to high
dollar award from ATP. As with all case studies, we did not attempt to
generalize to the entire program.

It can be very difficult to identify the specific research that private
sector firms are conducting. Firms are very careful about releasing detailed
information related to research and development activities they are
conducting given the competitive nature of most industries. Also, it can
take many years between the time a research project takes place and the time
that an outcome is realized. Thus, we chose projects that ATP awarded as a
result of competitions held in the early 1990s to retrospectively identify
similar research projects.

To fully understand the technologies under review, we studied the official
ATP project files, located at the National Institute of Standards and
Technology (NIST) headquarters in Gaithersburg, Maryland, for the three
projects we selected. According to NIST officials, all documents maintained
in these files are considered proprietary information. Within the project
files, we reviewed the original project proposals, technical and business
reviewer comment sheets, sponsor summaries and recommendations, and the
project manager's quarterly status reports and final report. To ensure the
confidentiality of the proprietary information, none of this information was
shared with the experts that we consulted. These experts were provided
project information drawn from ATP's March 1999 Status Report.

We interviewed ATP staff, outside experts, and award recipients to gain an
understanding of each of the technology sectors and related research and to
obtain their professional assessment of whether similar research to that
undertaken by the ATP award recipient was being funded by the private sector
during the same time period. To identify the ATP staff, we used NIST's list
of the technical and business reviewers and members of the Source Evaluation
Board (SEB), who had reviewed the project proposals. We asked these
reviewers to identify additional knowledgeable contacts to interview and
applicable reports and articles that would supplement our knowledge of the
technologies under review. For the handwriting recognition project, we
interviewed five NIST scientists who were either technical reviewers or
members of the SEB related to the project and 11 experts from industry and
academia. For the electronics project, we interviewed four NIST scientists
who were either technical reviewers or members of the SEB related to the
project and 13 experts from industry, academia, or other government
agencies. For the biotechnology project, we interviewed two NIST scientists
who were technical reviewers related to the project and 18 experts from
industry, academia, or other government agencies. These outside experts
represented Fortune 500 companies, such as Lucent, Microsoft, and IBM; major
universities such as MIT and the University of Maryland; and government
agencies, such as the National Aeronautics and Space Administration and the
National Science Foundation.

We developed a structured interview to facilitate our conversations with the
ATP staff, outside experts, and award recipients. The interview document
provided questions that addressed issues such as the level of similar
research at the time of the ATP funding, the identification of private
sector firms that conducted similar research, and the innovativeness of the
ATP proposals, among others.

To gather published and other information about each industry, we conducted
a literature search, as well as an Internet search. The literature search
used technical library sources to identify both academic journal and
industry-specific publications with articles addressing the research goals
relevant to each project. In addition, many of the technical experts
identified articles for us that we reviewed. The Internet searches provided
further information about the technologies under review and the private
sector companies involved in similar research at the time that the ATP
projects received funding. For example, we conducted a search on "wavelength
division multiplexing" on the Internet, and we identified several articles
related to this technology that provided background information for our
work. In addition, these articles provided contact names at some of the
private firms conducting similar research and academic and/or consultant
contacts who have expertise in the technologies under review. The project
files at NIST provided contact information for the ATP award recipients.

To show the level of related research that firms were conducting during and
around the time ATP funded the projects we reviewed, we also conducted
patent searches on the technical areas associated with each project. To
conduct our patent search, we accessed the U.S. Patent and Trademark
Office's (PTO) website (www.uspto.gov ), which contains PTO's patent data
base. For each of the three technologies we reviewed, we conducted a
full-text keyword search of the PTO's patent data base, using key words that
describe each technology as the criteria. For example, for our search for
patents on related research to the ATP project on handwriting recognition
software, we executed a search using "Handwriting Recognition" as the
criterion. We repeated this search for individual years of patent issuance,
beginning with 1985 and ending with December 1999. The patent information
demonstrates that the private sector was working on research topics that
related to the ATP projects we reviewed because the patents were issued
after the research was conducted.

We also reviewed ATP's current award selection process to determine whether
it could ensure that ATP would not fund research similar to that undertaken
by the private sector. This process applies to all project proposals
submitted to the ATP program. In conducting this review, we examined
published reports on the ATP program, legislation that created and shaped
the ATP program, and internal NIST documentation that describes the rules
and processes of the ATP program. We also discussed ATP's award selection
process with various NIST officials, including ATP management, project
managers, and SEB members. We did not independently verify the data we
obtained from NIST or the other entities we contacted. We conducted our
review from October 1999 through April 2000 in accordance with generally
accepted government auditing standards.

Communication Intelligence Corporation Project Summary

This ATP project received funding from the 1990 competition, the first
solicitation for the program. The project was completed in 1993. The
ATP-funded software technology is widely licensed, and a new product fully
incorporating the software is due on the market soon. The company also has
several new products related to multilingual handwriting recognition systems
and other software technologies that have been successful in the
marketplace.

Project Title
Computer Recognition of Natural Handwriting (Communication Intelligence
Corporation (CIC))

Amount of Funding Granted
$1,264,000 (58%), with CIC contributing $912,000 (42%) toward the project.

Summary of Project Purpose
To develop a natural handwriting data-entry system for computers for
applications where pen-based entry works best and for use by people who do
not or cannot use a keyboard.

Market Data
Dataquest, Inc., predicted the market for pen-based computers would
increase, potentially to $13.1 billion by 1995.

Description of Industry/Technology
Handwriting recognition was an emerging technology promising increased
productivity both for microcomputer owners and for users utilizing new
hand-held "pen-based" computers. Starting in the late 1950s, character
recognition developed into two areas--whether the characters to be
recognized were machine-printed or handwritten. Thus, a separate body of
technology research grew out of the areas of machine print and handwritten
text. For handwritten text, further research efforts were focused on two
additional areas--printed and cursive writing. To facilitate handwritten
text recognition, a pen-based, or stylus-based computer, (essentially a
tablet computer) that uses an electronic pen, or stylus, in conjunction with
a digitizing screen for data input is employed. These systems were expected
to supplement, rather than replace, traditional desktop systems. There was
concern, however, that high introductory prices and lack of consistent
handwriting recognition capabilities would impede the growth of pen-based
systems.

Limitations in the technology's accuracy rate made it unsuitable for every
user. While the technology had the potential for expanding the use of
computers to people who find conventional keyboards unnatural or
intimidating, for such tasks as text editing, dictation, or taking notes in
a meeting, its accuracy rate and speed were inconsistent. In October 1990,
handwriting recognition systems could only interpret unconnected block
writing, and no system offered 100 percent accuracy. Complaints about
hardware, software, and related components were common. For example,
processing power was often inadequate, leading to inconsistencies in the
machine's ability to capture data and analyze it. In addition, digitizers
were often slow at recording the flow of the pen on the screen. This
situation was expected to remain for the foreseeable future, until a new
generation of hardware and software could be developed.

CIC proposed to conduct research and development in natural or cursive
handwriting recognition to try to provide the means by which ordinary
handwriting skill could be used to communicate with computers for a wide
variety of applications.

Private Sector Research Activities
Handwriting recognition research has focused on print recognizers and
cursive recognizers. Unlike printed character recognition, cursive
recognizers must determine distinct characters in a continuous string of
writing. In addition, the natural handwriting of most people consists of a
mix of printed and cursive; therefore, the recognizer must be able to
determine when a break means a new word and when it does not. Cursive
recognizers can also exhibit some uncertainty in the identification of
words. Since most cursive recognizers are dictionary-based, the system will
attempt to approximate the word that a sequence of characters represents and
then cross-reference a dictionary or glossary to see if such a character
string exists. If the recognizer is uncertain, the system will select
alternative word possibilities.

In October 1991, Paragraph International announced a licensing and
development agreement with Apple Computer for Paragraph's cursive
handwriting recognition technology. Paragraph's technology provided Apple
with a foundation for recognizing printed, written, or block handwritten
text.

In 1989, Paragraph JV, the Soviet half of the joint venture, started
developing a cursive handwriting recognition technology, in affiliation with
two Soviet agencies: the Council for Economics and Mathematics, and the
Academy of National Economics. Paragraph developed two main recognition
technologies. The first, Calligrapher, is software that can decipher written
text as it is written; in addition, it is the basis for the pen-based
recognition system. The second technology, Parascript, is a static
recognition system for use with an optical character reader. Lexicus, a
division of Motorola, concentrated research on cursive recognition as well,
as did Go Corporation, Palm Computing, and others.

ATP Review Process
For its technical evaluation, CIC was assessed on the quality and
innovativeness of the proposal, coherency of the technical plan, overall
scientific and technical merit, and staff quality, among others. The three
technical reviewers were government scientists from NIST and DOD. For the
technical categories, the evaluations consistently supported CIC.

Regarding its business evaluation, CIC was assessed on several issues, such
as potential to improve U.S. economic growth, staffing and facilities,
evidence of commitment to complete project beyond federal grant, and overall
business merit, among others. For business and economic related criteria,
CIC received scores that recommended funding.

Results/Status of Project
CIC researchers sought to perfect software that could effectively recognize
cursive handwriting and now has products that provide handwriting
recognition for printed English and some foreign languages. Currently, the
company's core software technologies include multilingual handwriting
recognition systems, dynamic signature verification, natural messaging, and
operating system extensions that enable pen input. CIC describes its
products as technologies designed to increase the ease of use,
functionality, and security of wireless electronic devices ranging from
handheld companions to cellular telephones. Key licensees of the company's
technologies include companies such as Ericsson, Fujitsu, Hitachi,
Microsoft, Mitsubishi, and National Semiconductor.

During the project, CIC researchers created a data base with thousands of
cursive handwriting samples and developed new recognition algorithms. After
analyzing the handwriting sample data base and developing the recognition
methods, the researchers developed procedures that permit fast computation
with modest computer memory requirements. The company has achieved other
goals as well. For example, CIC has:

ï¿½ incorporated some of the ATP-funded technology into a registered software
product, Handwriter, which recognizes cursive writing in limited
circumstances (previously it recognized only printing);

ï¿½ licensed the Handwriter software to more than a dozen computer
manufacturers worldwide, generating $360,000 in revenue from sales of 30,000
units in 1997;

ï¿½ launched a new product in 1996 called Handwriter MX, a stylus and tablet
data entry device using upgraded Handwriter software;

ï¿½ sold 11,000 copies of handwriter MX in 1997, with sales totaling more than
$2.2 million; and

ï¿½ received the "Ease of Use Seal of Commendation" from the Commendation
Program of the Arthritis Foundation for the company's handwriter
products--indicating their value to disabled people who have trouble with
keyboard entry.

Accuwave Corporation Project Summary

This ATP project was awarded funding from the 1992 competition. Although
Accuwave eventually filed for bankruptcy protection and was unable to
commercialize a wavelength division multiplexing system, it did complete the
terms of its ATP cooperative agreement by the end of the project in 1995.

Project Title
Expanding the Number of Light Signals in an Optical Fiber (Accuwave
Corporation).

Amount of Funding Granted
$1,987,000 (69%), with Accuwave Corporation contributing $898,000 (31%)
toward the project.

Summary of Project Purpose
To develop holographic-optics technology7 that will increase (by more than
10 times) the number of signals that can be transmitted through a single
optical fiber strand. 8 This technology is based on the concept of
wavelength division multiplexing (WDM), which transmits separate light
signals through a single optical fiber strand at different wavelengths.

Market Data
According to consultants hired by Accuwave at the time of the ATP proposal,
the total market for Accuwave's technology was expected to reach $40
million. Another consulting firm estimates that by 2003, sales of WDM
systems will reach $40 billion worldwide.

Description of Industry/Technology
Due to the increased use of telephones, fax machines, mobile telephones, and
particularly, the Internet, U.S. telecommunication firms have experienced an
increased demand for capacity of their transmission networks, which
primarily consist of fiber optic cables. The installation of additional
fiber optic cables to deal with the increase in demand for capacity can be
very costly. WDM provides a cost-effective alternative to installing
additional fiber optic cables. WDM allows for the simultaneous transmission
of multiple light signals through the same fiber at different wavelengths.
Conceptual research on WDM systems dates back to the early 1980s, but the
development and commercialization of WDM systems did not begin to flourish
until the mid-1990s. One of the primary reasons why WDM had not become
practical until recently was the lack of suitable amplifiers for signals
traveling long distances.9 According to experts we interviewed, serious
research in WDM began in the early 1990s as amplifier technology evolved.

This ATP project focused on using a holography-based approach to aid in the
development of a WDM system to increase the capacity of existing fiber optic
cables. Accuwave's approach employed volume holography, which uses a series
of holograms as filters, stored in a volume of photorefractive
(light-bending) material, to direct different light signals to separate
wavelengths on a single fiber strand. The concept of volume holography dates
back to the 1970s and was applied primarily to research on optical signal
processing and memory storage. However, volume holography fell into disfavor
during the 1980s, primarily because of two problems: efficiency (amount of
signal loss) and reliability (deterioration of filters due to changes in
temperature). According to the experts we consulted, no one else in the
industry seriously considered volume holography as a method to direct
multiple signals onto different wavelengths of an optical fiber strand for
telecommunications.

Private Sector Research Activities
Several private firms were involved in research activities related to WDM in
the late 1980s and early 1990s. One of the early participants in this
industry was AT&T and its research arm, Bell Labs. Lucent Technologies,
which used to be part of Bell Labs, developed an 8-wavelength WDM system in
1995. Ciena Corporation, a company formed in 1992, received a total of $40
million in venture capital funding and developed a 16-wavelength WDM
system,10 which was commercially unveiled in March 1996. Several other
companies were researching and developing WDM systems in the 1990s,
including Nortel, Pirelli, Alcatel, and others. The other companies
competing in this industry used different methods and materials, other than
holographic filters, to develop their WDM systems. For example, Ciena
Corporation used fiber-Bragg gratings, which are filters that are written
onto the fiber optic cable itself, to help separate multiple signals onto
different wavelengths within a single optical fiber strand. Much of the
research in this industry was kept proprietary and was not released to the
public.

ATP Review Process
Technical reviewers from NIST, the U.S. Air Force, and the National Security
Agency evaluated Accuwave's proposal on issues such as quality and
innovativeness of the proposal, coherency of the technical plan, overall
scientific and technical merit, as well as staff quality, and others. For
these categories, three of the four technical evaluations were consistent,
stating that Accuwave's proposal was innovative. The fourth technical
evaluator, however, was more critical of the proposal, stating that
Accuwave's method was "another in a long line of techniques under
consideration for high density WDM systems."

Business reviewers assessed Accuwave's proposal on issues such as the
potential to improve U.S. economic growth, staffing and facilities, evidence
of commitment to continue project beyond federal grant, and overall business
merit, among other items. For these categories, the business reviewers were
critical of the proposal, citing poor commercialization planning, lack of
manufacturing capability, etc. ATP officials, however, listened to the
company's oral presentation. As a result of the presentation and despite
both technical and business reviewer concerns, ATP decided to fund the
project.

Results/Status of Project
According to a former Accuwave official, problems of efficiency and
reliability arose during Accuwave's research to develop a WDM system.
Accuwave was able to make improvements on these issues but not enough to
fully develop and market a successful WDM system for the telecommunications
market. In addition, Ciena Corporation, a competitor, beat Accuwave to the
market in 1996 with a 16-wavelength WDM system. Accuwave did not learn about
Ciena until 1995, and Ciena's research was kept proprietary. Accuwave did
commercialize a few WDM components; the most successful of which was called
the wavelength locker, a device that controls the frequency of the laser.
Accuwave's wavelength locker was a limited commercial success, according to
a former Accuwave official. Sales of Accuwave's components reached about $3
million. According to a former Accuwave official, this was not enough to
appease the Board members and the venture capitalists, and the decision was
made to file for bankruptcy protection in October 1998.

Tissue Engineering, Inc., Project Summary

This ATP project was awarded funding from the 1992 competition. Tissue
Engineering (TE) was able to successfully complete their ATP project goals
by the end of the project in 1996. However, the company has not yet
developed a prostheses product that can be transplanted into humans and
eventually be reabsorbed by the body.

Project Title
Prostheses Made of Biomaterials that Regenerate Body Parts [Tissue
Engineering, Inc. (TE)]

Amount of Funding Granted
$1,999,000 (48%), with TE contributing $2,128,000 (52%) toward the project.

Summary of Project Purpose
To develop techniques for extracting and storing collagen and spinning and
weaving collagen fibers into fabrics and other forms suitable for human
prostheses that could induce the body's own cells to rebuild lost tissue
while gradually replacing the prosthesis.

Market Data
According to BusinessWeek magazine, the president of the Pittsburgh Tissue
Engineering Initiative research consortium has estimated that the potential
overall market for engineered and regenerated tissues to be $80 billion.

Description of Industry/Technology
One industry expert said that the premise of the tissue engineering field is
to create devices that are bio-regenerative, so that the body can eventually
mimic and remodel what is damaged; potentially, experts believed that the
result could be more natural than other transplants. In addition, engineered
tissues could possibly replace donated organ transplants, which are very
limited in supply. According to industry experts, by the early 1990s, the
new multidisciplinary field of "tissue engineering" was drawing scientific
interest.11 For over a decade before,

however, related basic research was being conducted. Industry experts
explained that research using synthetics as well as the protein collagen12
led to discoveries; scientists were looking for a way to package cells in a
three-dimensional format, like tissues and organs. According to industry
experts, there are remaining challenges; particularly, the challenge to
develop products that can be reliably transplanted into and interact with
the body without creating a negative reaction by the host.

According to industry experts that we interviewed, tissue engineering
research in the early 1990s focused upon synthetics and collagen technology
for the development of products, as well as research attempting to
understand extracellular matrix from a biological and cell biology
perspective. 13 Some of these experts identified academic and private labs
that were conducting research on collagen structures by 1993.

Private Sector Research Activities
Prior to 1992, a number of other private sector and university groups were
also working on a variety of technical approaches to develop biological
equivalents for defective tissues and organs for use in the human body.
Among the groups involved in tissue engineering, the experts that we
interviewed named the following: Organogenesis; Integra LifeSciences;
Advanced Tissue Sciences; Collagen Corporation; Genzyme; Osiris
Therapeutics; Matrix Pharmaceuticals; and, researchers at MIT and other
universities, hospitals, and laboratories. A study published in the journal
Tissue Engineering estimated that the government has provided less than 10
percent of tissue engineering funding.14 According to one industry expert,
this may have been an advantage as it forced researchers to start companies
and move forward, rather than spend many years in academic settings.
Projects by other companies included attempts to bioengineer bone, skin,
teeth, cartilage, valves, or other cells, tissues and organs. For example,
Integra LifeSciences, Organogenesis, and Advanced Tissue Sciences have all
been involved in research leading to bioengineered skin. In addition,
Genzyme Tissue, Integra LifeSciences, Advanced Tissue Sciences, ReGen
Biologics, and Osiris Therapeutics are companies in competition to develop
engineered cartilage products using different technical approaches.

According to some of the industry experts that we interviewed, some of what
TE proposed and did during the ATP project did not advance the core of the
technology of regeneration. However, in 1992, the industry had not defined
an industry-wide critical or core technology goal. The TE project was
intended to provide a unique structural support for defective tissue to be
gradually replaced by healthy tissue. No other therapy was available at the
time of the award. Nonetheless, one expert described TE's technology as a
derivative technology, rather than a high-risk and innovative technology.

ATP Review Process
During the ATP selection process, technical reviewers assessed the TE
project on scientific and technical merit, feasibility, coherency, and
appropriateness of staff and equipment. The three reviewers, all federal
employees, evaluated the project as innovative. Based on these reviews,
evaluations by three business reviewers, and a Source Evaluation Board
decision, ATP funded the project.

Results/Status of Project
According to TE, the company had a profitable and rewarding start with the
ATP award. According to the company's founder, the ATP project was highly
innovative because it would use naturally occurring collagen to re-grow
tissue. The company developed a collagen spinning technique, which allows
them to imitate the scaffolding of tissues in the body. A TE official claims
this can be done on a commercial scale. In addition, the company has also
been able to insert cells into the collagen to re-grow tissue in the
laboratory. Some of the company's accomplishments include:

ï¿½ Two patents were awarded to the company for its work under the ATP award:
"Apparatus and Method for Spinning and Processing Collagen Fiber"15 and
"Bipolymer Foams Having Extracellular Matrix Particulates."16

ï¿½ TE indicated that it would soon begin animal trials for its orthopedic
products and eventually progress into human trials. TE also mentioned that
it has initiated collaborative efforts with larger biotechnology companies.

Comments From the Department of Commerce

GAO Contact and Staff Acknowledgments

Robin Nazzaro (202) 512-6246

Phil Amon, Shannon Bondi, and Diane Raynes also made key contributions to
this report.

(141384)

Figure 1: The Number of Patents Issued from 1985 Through
1999 for a Handwriting Recognition System 9

Figure 2: The Number of Patents Issued from 1985 Through
1999 for Wavelength Division Multiplexing Systems and Components 11

Figure 3: The Number of Patents Issued from 1985 Through
1999 Related to Tissue Engineering 13
  

1. Algorithm here refers to the mathematical procedures involved in
recognizing writing as it is being written on a computer device.

2. IEEE Transactions on Pattern Analysis and Machine Intelligence, "The
State of the Art in On-Line Handwritting Recognition." (Aug. 1990), vol. 12,
no. 8.

3. A patent is a grant given by a government to an inventor of the right to
exclude others for a limited time (usually 20 years) from making, using, or
selling his or her invention.

4. Intellectual Property: Comparison of Patent Examination Statistics for
Fiscal Years 1994-1995 (GAO/RCED-97-58 , Mar. 13, 1997).

5. A fiber optic cable consists of many extremely thin strands of glass or
plastic, each capable of transmitting light signals. Wavelength division
multiplexing transmits separate light signals through a single optical fiber
strand at different wavelengths.

6. "Biotech Bodies," BusinessWeek, July 27, 1998.

7. Holography is a technique that allows the recording and playback of true,
three-dimensional images, called holograms.

8. A fiber optic cable consists of many extremely thin strands of glass or
plastic, each capable of transmitting light signals.

9. Light signals traveling through fibers fade to undetectable levels after
a couple hundred kilometers, therefore requiring amplification to increase
the strength of the signal.

10. WDM systems with more than 8 wavelengths are called dense wavelength
division multiplexing (DWDM) systems.

11. In 1987, the National Science Foundation sponsored a conference where
the term "tissue engineering" was first defined.

12. Collagen is a structural protein that occurs in vertebrates as the main
constituent of connective tissue fibrils and in bones. It is the most widely
distributed protein in the human body.

13. Extracellular matrix is described as molecular networks that are
crosslinked and are swollen in fluids surrounding the cells.

14. "An Economic Survey of the Emerging Tissue Engineering Industry," Tissue
Engineering, Fall 1998.

15. "Apparatus and Method for Spinning and Processing Collagen Fiber" U.S.
Patent Number 5,562,946, granted on 10/8/1996.

16. "Bipolymer Foams Having Extracellular Matrix Particulates" U.S. Patent
Number 5,709,934, granted on 1/20/1998.
*** End of document. ***