Allied Signal amorphous metal foil patent dispute

Used to illustrate how an inadequate NDA with a university collaborator (Professor Chad Graham, U. Penn) cost Allied Signal the patent on the magnetic-loss properties of their rapidly solidified material.

The company that invented this used to be called Allied Signal, and now it's part of Honeywell. They built a fifty million dollar plant. The plant was commissioned by a graduate of this department — happened to be my house tutor when I was a freshman. He was a materials scientist. It turns out Honeywell didn't get the patent on the most important property of this material. They were studying rapidly solidified metals back in the 1970s, and they sent some to a guy named Professor Chad Graham at the University of Pennsylvania, because he was studying magnetic materials, and asked him to measure the magnetic permeability. They were just trying to dot the i's and cross the t's. He measured it, showed it was five times softer — five times lower magnetic loss — than anything else ever discovered. And since they didn't have a nondisclosure agreement with him, the University of Pennsylvania owned the patent rights to that material. So they had to buy him back, and it was a big fight.

---

Tom's IP cautionary tale. Allied Signal sends pre-commercial amorphous metal samples to Professor Chad Graham at the University of Pennsylvania for magnetic susceptibility measurement, with no NDA. UPenn ends up with the IP rights to the low-magnetic-loss properties; hundreds of millions of dollars lost. The structural lesson for the corpus is the now-universal industry practice of mandatory IP agreements before any technical conversation.

Tom: Okay, he was in charge of Honeywell [Allied Signal] for building Conway, South Carolina, and the Japanese built the plant. He could tell you stories about all the intellectual property problems of doing Japanese when you're using intellectual property. He can tell you the story about how Allied Signal sent a sample of their little laboratory material — before they started building a tonnage plant — to a guy named Professor Chad Graham at the University of Pennsylvania. Professor Graham was an expert at measuring magnetic properties. Allied Signal in their research lab didn't have the equipment to measure the magnetic susceptibility of samples, and they were just down the street in New Jersey from Philadelphia, so they asked Professor Graham, would you guys measure this. He said sure.