Annex: Graphene research and innovation
1.In March 2016, members of the Committee161 visited the National Graphene Institute (NGI) at the University of Manchester, the national centre for graphene research in the UK, which was officially opened by the then Chancellor of the Exchequer in March 2015. Graphene, a one atom thick form of carbon, has great but still uncharted potential—it is one hundred times stronger than steel and conducts electricity better than copper. We discussed the NGI’s work with the University of Manchester vice-chancellor and others and saw the NGI laboratories.
2.In March 2016 media reports appeared which alleged that some academics had concerns about the NGI’s safeguards on its research and that its intellectual property was being inappropriately used by a company with Taiwanese links (though UK-registered)—BGT Materials—and Chinese universities.162
3.We decided to examine the state of research and innovation of graphene, as well as the media allegations about the University’s intellectual property management. We took oral evidence from Sir Andre Geim, one of the discoverers of graphene, the University, businesses involved in commercialising graphene, Innovate UK and Baroness Neville-Rolfe, then minister for intellectual property.163 We also received written evidence from these witnesses and from others.164
Graphene research and its commercialisation
4.The University of Manchester highlighted the extent of the likely growth in the global market for ‘graphene materials’—from $20 million in 2014 to more than $390 million in 2024, and “much higher” for ‘graphene-enabled products’.165 Sir Andre Geim described graphene as “a revolution in terms of new materials”, and explained that “the superlatives that the material has attracted—the strongest, the thinnest, the most conductive, the most pliable and so on—definitely indicate that there are many possibilities”.166
5.Sir Andre emphasised, however, that graphene’s development was still at a relatively early stage:
What we are witnessing now is the first stage of the commercialisation of graphene. It is probably less than five years since it was demonstrated that this group of materials could be obtained in tonnes and in square kilometres. [ … ] At the moment all applications are, frankly speaking, simple, dirty and marginal improvements, not the killer applications that everyone is talking about. This is the natural progression. Take the silicon age. It took between 20 and 40 years to study the properties of silicon in terms of fundamental research and applications. Then some very obscure applications came about, first ugly transistors, then simplistic circuits and so on. It took 50 to 60 years before we got our shiny iPhones.167
6.That shaped the role of the University in facilitating graphene’s development. Sir Andre Geim told us:
I see the relationship between the University and collaborating companies as a way to stimulate graphene developments for the good of UK plc rather than for profit. If and when the companies start generating profits, the University will of course benefit through shareholding and patents. But this is secondary. [ … ] I only wish someone would use our IP or patents, but it is still too early at this stage of graphene development. The Institute’s involvement has been to provide expertise in graphene, which allows companies including BGT Materials to avoid silly mistakes. [ … ] This is the Institute’s most important function for the moment.168
7.The Government has invested more than £120 million “in graphene research, training and development”.169 Last month it announced further funding grants for the Sir Henry Royce Institute for Advanced Materials at Manchester, which undertakes graphene research.170
8.The University of Manchester told us that it had “a strategy of pursuing strategic partnerships, promoting inter-disciplinarity and understanding partners’ needs” and that:
This has been reflected in our approach to graphene where partnerships may be strategic or on a project basis. There are three kinds of projects: Those which are completely new [ … ], those which rely on existing industry with a strong presence in the UK [ … ] and those which rely on existing industry which does not have a strong presence in the UK.171
9.Some of our witness were uncertain about the NGI’s role. Tim Harper thought it was unclear whether its role was “purely for academic research or whether it is supposed to also lead to the commercialisation of graphene”172. He thought the line between the two was “fuzzy”.173 Others—Ray Gibbs of Haydale Graphene Industries, Dr Liam Britnell from BGT Materials and Harry Swan of Thomas Swan & Company—did not share that uncertainty.174
10.The NGI’s focus, the University of Manchester told us, was on “academic-led research (‘Technology Readiness Levels’ 1–5) into graphene/related 2-D materials in collaboration with industry”. Its work involved the “demonstration of new concepts, new applications and fundamental studies, and establishing the potential of graphene by producing new concept products and processes”.175 The Centre for Process Innovation, part of the High Value Manufacturing Catapult, believed that the UK spent more on graphene research than on application and manufacturing. They told us that “it may be that competitors are deploying more of their resources on the exploitation of graphene technology”.176
11.The Graphene Engineering Innovation Centre, due to open in 2018, is designed to help such technology exploitation. The University of Manchester explained that while the NGI was under construction it became evident that “its effectiveness would be substantially enhanced by creating a further institution to [ … ] provide convincing demonstrations of next-generation products and processes in a way that de-risked them for industry.” This, they told us, “underpinned the rationale for setting up the Graphene Engineering Innovation Centre”, which will focus on industry led technology development (Technology Readiness Levels 3–6).177 Professor Luke Georghiou, Vice-President for Research and Innovation at the University of Manchester, also explained that the NGI (unlike the Graphene Engineering Innovation Centre) was “a research place” and therefore not liable to VAT.178
Access for SMEs
12.One of the issues raised in the media reports last year was that SMEs were finding it difficult to get access to the NGI. Dr Nigel Salter of 2-D Tech, a graphene SME, told us that his company’s relationship with the University was “generally poor: There was a culture of competition and mutual distrust between the University academics and 2-D Tech”.179 He wanted to see universities adopting longer term strategies for sharing intellectual property with SMEs:
Universities tend to aim to establish a portfolio of patents that they then endeavour to licence for short-term return or use as a basis for spin-out companies. Both of these routes tend to preclude the possibility of working with existing SMEs who can take on the seed-stage ideas and provide a commercial platform. Universities should consider the option of retaining ownership of patents, but giving access to SMEs to develop the technology and accepting that any returns may be many years away. [ … ] In the current febrile world of graphene patents, there is much to be said for universities holding ownership, providing they adopt practical and long term strategies for sharing with SMEs, many of whom will not persist.180
13.Dr Erik Cox and his company, Inclusive Designs Ltd, complained that the NGI resisted meeting them, citing “possible confidentiality issues with other projects”.181 Tim Harper, a nanotechnology entrepreneur, similarly criticised the NGI for “choosing to partner chiefly with large multinational corporations”.182 Some SMEs complained that fees charged by the University for exploratory engagement presented a problem for them.183
14.Others were positive about their relationship with the NGI and the University, including three of our witnesses—Ray Gibbs (Haydale Graphene Industries),184 Dr Liam Britnell (BGT Materials)185 and Harry Swan (Thomas Swan & Company).186
15.Innovate UK emphasised that “most UK SMEs are focused on ‘up stream’ processes for graphene related technology; that is, manufacture of graphene itself, or intermediate products such as inks and composites, rather than final end-products such as light bulbs or structural composites.187 The University of Manchester disputed the complaints we had received from some SMEs.188 They told us that it was working on graphene with 69 organisations (associated with 85 projects), of which 28 were SMEs (including 20 SMEs with a UK manufacturing base).189 They explained how their links with different types of businesses depended on the stage of maturity of the relevant technology:
Our approach is to enter into non-exclusive arrangements to optimise opportunities for collaboration and commercial returns. IP is made available on appropriate terms to secure collaborative arrangements with business for the NGI, given that our strategy envisaged that ‘first’ significant commercialisation is likely to be achieved through such engagement with established companies [ … ]. ‘Second’ and ‘third’ phases will be achieved through our own spin-outs led by respected entrepreneurs and engineering-savvy CEOs, and student start-ups, and then ultimately licensing activities. This would be expected at the point when the market (for angel and venture capital investment and stand-alone licensing) begins to mature.190
16.The University told us that it had ‘project partners’ which included major global companies as well as “several SMEs”. It also had two ‘strategic partners’—Morgan Advanced Materials and BGT Materials—which brought “the kind of product engineering and design expertise necessary for commercialising 2D materials, which is in short supply in the UK”.191 Professor Georghiou explained that “we find it easier to work with established companies. That is not necessarily a statement about size; we include SMEs in the term “established companies”, but they have to have a sufficiently developed infrastructure and employ people who are able to use the relevant science”, and that the University required payment for its substantive contacts with businesses because of a universities-wide requirement to “work at cost”.192
IP management and patents
17.Worldwide, the number of graphene-related patent applications rose to over 9,000 in 2014 from 1,000 in 2010, according to the UK Intellectual Property Office, with most submitted by China. The Centre for Process Innovation, part of High Value Manufacturing Catapult, noted that in some countries there is a culture that promotes the filing of patent applications, but that many of these would never be granted. The Centre for Process Innovation highlighted that producers and users of new materials, such as graphene, develop intellectual property through the accumulation of know-how, and that “in many early-stage organisations [ … ] retaining internal know-how is often of greater value than patents”.193
18.Innovate UK explained the limitations of patenting and of the number of patents as a measure of innovation:
There are numerous approaches to the commercialisation of intellectual property, from practising in secret at one end, to patent filing to establish a monopoly position at the other. Companies often combine different approaches and patents are also filed to put the innovation into the public domain to prevent someone else from making a claim to that particular invention. It is important to understand that a patent is a small part of the commercialisation process. On their own patents generate relatively little value. [ … ] Simply counting the number of patents produced within a region or country is a poor measure of innovation, especially with some companies engaged in ‘patent thicket’ strategies.194
19.In a similar vein, Dr Nigel Salter, the managing director of 2-D Tech, a graphene SME, told us:
Patents come in many flavours and some are worth more than others. The objective should be to identify a market and a technological solution and then protect this combination … Of themselves, many early-stage conceptual patents have little worth, and can become barriers to partnerships, shared endeavour and meaningful communication. They are important, but are a means to an end and not an end in themselves. [ … ] In the graphene world there is a tendency to patent at a very early stage and well before the scope, the value and the technology is suitably mature. [ … ] Researchers are keen to patent their ideas, often for personal reputational reasons, and to keep the know-how to themselves. This inhibits critical review from an application or market perspective. It also wastes time and money and can inhibit effective commercialisation.195
20.Dr Nigel Salter, the managing director of 2-D Tech, was concerned about academic staff being directors of BGT Materials because, he believed, it “inhibited open discussion [ … ] with other companies”.196 The University of Manchester signed a research collaboration agreement with BGT Materials—one of the NGI’s two ‘strategic partners’ (Annex, paragraph 16)—in October 2013 and has a 17.5% shareholding in the company. Professor Georghiou emphasised that “it is absolutely the norm: We have a number of academics who sit on the board, never in an executive position”.197 He explained that “if there is a partnership with a business in a particular area and our researchers are working with one company, we cannot then work with another company in an area very close to that: It would not matter if the incumbent was a large firm or a small firm.”198
21.BGT Materials similarly refuted last year’s media reports (Annex, paragraph 2) alleging that it enjoyed inappropriately favoured access to graphene intellectual property or that confidential information was being shared with Chinese universities and businesses. BGT Materials told us that non-disclosure agreements had been “respected”.199 The University of Manchester refuted the claims about academics “boycotting” the NGI and insisted that there was no evidence of BGT Materials having access to confidential research programmes or of poor safeguards on the University’s intellectual property. Sir Andre Geim described the allegations as “ridiculous”.200
22.Professor Georghiou explained that the University developed intellectual property in collaboration with companies, which would have “the full rights, usually by their sector”, but that the University would retain the right to use it in further research and to apply it in other sectors.201 When it came to graphene, the University explained that:
The initial method of isolating graphene could not sensibly be patented as this was not a commercial process and applications were not then known. The sole effect at that time would have been to restrict others from experimenting on the material, which is counter to the University’s ethos. [ … ] The number of patents filed or published has been cited as a measure of research and commercial activity, but numbers do not equate to quality or practically useful inventions. [ … ] Our aim is to acquire ‘enabling’ IP so that it provides a broad platform for application and product opportunities for ourselves and our collaborators, as well as potentially giving us a position which will require others to seek licences from the University to operate their IP.202
23.Sir Andre Geim believed that “some academics publish too many patents”. He explained that the cost of supporting, or defending, patents had to be taken into account:
I have 10 patents or so at the moment for very specific applications that are defensible [ … ] You have to think about the cost of patents. Each patent costs £50,000 to support over its lifetime [ … ] Patents are a very inaccurate and artificial measure of success [ … ] We are not behind; we are more selective in publishing [ … ] If you asked me how many of those 10 patents I should have had, I would probably say three or four. I doubt that six of those are really going to play anyway [ … ] Patents are a defensive mechanism to defend your commercial product. Universities by definition do not produce commercial products.203
The University of Manchester’s projections were that over the next five years the cost of securing and defending its patents in ‘graphene/2-D’ materials would be £750,000 a year.204 They told us that:
As collaborations and general activity increases, when the NGI comes fully online, patent and related costs will likely go higher. These costs have been met from our own resources and from our Higher Education Innovation Fund allocation.205
Tim Harper, a nanotechnology entrepreneur, believed that “most [university] Technology Transfer Offices struggle to cover the costs of evaluating, protecting and licencing intellectual property”.206
24.The University told us that it had had an external review of its “graphene activities and arrangements” in 2012 which had “supported our approach”. Subsequently, they told us, “an independent audit of our graphene IP strategy and practice, led by the then President of the Chartered Patent Agents’ Society, in June 2014 fully endorsed our practices with some recommendations for improvements”.207
Standards
25.As an evolving technology, the issue of what constitutes graphene has become more important. Innovate UK pointed out that “there is no ‘standard’ form of graphene and the end product varies from company to company”.208 Innovate UK highlighted that “characterising the material requires specialist equipment that is usually out of reach for small companies” and that as a result there was some evidence that “variability in the quality of graphene supplied from sources (particularly outside the UK) is affecting the development of high performance downstream products”.209 Xefro Club, which represents a group of dissatisfied customers of a business selling ‘graphene radiators’, told of about their dangerous experiences.210 The Financial Conduct Authority has warned about scams where consumers are targeted by companies offering unregulated investments in graphene.211
26.As Professor Georghiou of University of Manchester put it, “you need standards to eliminate [ … ] the bottom-feeders who pretend they have graphene when they do not”.212 The University emphasised that:
The commercialisation of graphene [ … ] requires a fit-for-purpose standards regime. Measurement standards are needed to allow the accurate, precise and rapid characterisation of these new materials, and hence assess any safety issues. Without them, market confidence is undermined, as users cannot compare different commercial materials or develop application areas without first understanding how changes in their material ultimately affects their product. The market needs to ‘trust’ what it is getting. […] To address this deficit, the NGI and the National Physical Laboratory […] are addressing the perceived metrology and standardisation gap in commercialisation.213
Wider issues
27.Our visit to the NGI and our short inquiry on graphene highlighted wider issues about the way universities more generally manage the intellectual property of their research programmes and engage in technology transfer. In July 2016 we launched such a wider inquiry. This Annex, describing our graphene scrutiny, forms part of the report on that inquiry.
161 Victoria Borwick MP, Stella Creasy MP and Graham Stringer MP.
162 Academics in revolt as China reaps benefits of British breakthrough’, Sunday Times, 13 March 2016
163 Oral evidence taken on 26 April 2016, HC (2015–16) 960, and on 13 September 2016, HC (2016–17) 159
164 Science and Technology Committee, Graphene inquiry (references to the inquiry’s written evidence are labelled with a ‘GRA’ prefix).
165 University of Manchester (GRA0012); IDTechEx, Graphene Markets, Technologies and Opportunities 2014–2024 (May 2014)
166 Oral evidence taken on 26 April 2016, HC (2015–16) 960, Q63
167 Oral evidence taken on 26 April 2016, HC (2015–16) 960, Q63
168 ‘Sir Andre Geim: response to Sunday Times’, Manchester university website, 16 March 2016
169 BIS (GRA020); Oral evidence taken on 26 April 2016, HC (2015–16) 960, Q64
170 HM Government, ‘£229 million of industrial strategy investment in science, research and innovation’, Gov.uk press release (23 February 2017)
173 Oral evidence taken on 26 April 2016, HC (2015–16) 960, Qq24–25
174 Oral evidence taken on 26 April 2016, HC (2015–16) 960, Qq25–27
178 Oral evidence taken on 26 April 2016, HC (2015–16) 960, Q91
181 Inclusive Designs Ltd (GRA0005); Oral evidence taken on 26 April 2016, HC (2015–16) 960, Qq4, 9, 20
182 Tim Harper (GRA0006); Oral evidence taken on 26 April 2016, HC (2015–16) 960, Q20
183 Oral evidence taken on 26 April 2016, HC (2015–16) 960, Qq61–62
184 Oral evidence taken on 26 April 2016, HC (2015–16) 960, Q8
185 Oral evidence taken on 26 April 2016, HC (2015–16) 960, Qq8, 16
186 Oral evidence taken on 26 April 2016, HC (2015–16) 960, Q18
188 A group of SMEs raised concerns, and the University of Manchester responded, in successive submissions: Tim Harper (GRA022), University of Manchester (GRA0026), Manchester Graphene Technologies Ltd (GRA0027), University of Manchester (MIP0027), Brian McCann, Tim Harper and Alex Stewart (MIP0033), and University of Manchester (MIP0035).
189 Oral evidence taken on 26 April 2016, HC (2015–16) 960, Q66; University of Manchester (GRA0012) updated by (MIP0035)
192 Oral evidence taken on 26 April 2016, HC (2015–16) 960, Q75
195 Dr Nigel Salter (GRA0011); See also Oral evidence taken on 26 April 2016, HC (2015–16) 960, Q46 [Dr Erik Cox] and Q54 [Ray Gibbs]
197 Oral evidence taken on 26 April 2016, HC (2015–16) 960, Q87
198 Oral evidence taken on 26 April 2016, HC (2015–16) 960, Q76
199 Oral evidence taken on 26 April 2016, HC (2015–16) 960, Qq29–31, 33–34, 36, 39
200 Oral evidence taken on 26 April 2016, HC (2015–16) 960, Q69
201 Oral evidence taken on 26 April 2016, HC (2015–16) 960, Q96
203 Oral evidence taken on 26 April 2016, HC (2015–16) 960, Qq101–102
204 Oral evidence taken on 26 April 2016, HC (2015–16) 960, Q105; University of Manchester (GRA0012)
208 Innovate UK (GRA0015); See also oral evidence taken on 26 April 2016, HC (2015–16) 960, Q55
211 Graphene investment schemes, Financial Conduct Authority website
212 Oral evidence taken on 26 April 2016, HC (2015–16) 960, Q72
10 March 2017