A firm focused on patent licensing wants to design a new kind of reactor
Intellectual Ventures of Bellevue, WA, is a high energy operation that gets its revenue primarily from acquiring patents and then enforcing its rights to royalties when others want to license them. When other firms infringe on these patents, the firm sends its lawyers over for a heart-to-heart chat. The Wall Street Journal has two reports this week on the firm's aggressive tactics with high tech computer and communications firms.
What makes the firm noteworthy for the nuclear industry is that in August the Puget Sound Business Journal reported that the firm has shifted gears away from short term returns and, for one project, started an investment with a payoff measured in decades. It hired 30 nuclear engineers to design a new type of nuclear reactor that doesn't require enriched uranium for its fuel.
As advocates of alternative reactor designs know well, that kind of project could take a long time to gain market share. A firm bent on harvesting licensing revenues doesn't usually have that kind of time to wait. Investors want returns within three-to-five years and a cash out strategy. However, one investor has a different mind set. More on this below.
Note to nukes - look up traveling wave reactor. In addition to the energy wave reactor concept, the firm is also in pursuit of reactor design ideas to use thorium as a fuel. [large image] The firm's goal is to develop a reactor which could be fueled in the construction phase and operate without refueling for up to 60 years.
[Edward Teller's paper (PDF file) on the concept for the traveling wave reactor was published in 1997. Hat tip to Kirk Sorensen who hosts an online forum on Thorium reactors that has additional technical discussions.]
Intellectual Ventures seems to have bypassed a variety of options for small reactors because of the focus on nonproliferation objectives as well as economic scale.
A really long run time to payoff?
Even more unusual is that the payoff for this R&D work is likely decades in the future running completely counter to the firm's current business philosophy. The Wall Street Journal summed up the operation this way in an in-depth profile published on Sept 17.
Millionaire Nathan Myhrvold, renowned in the computer industry as a Renaissance man, has a less lofty message for tech companies these days: Pay up. . . . Intellectual Ventures, has secured payments in the range of $200 million to $400 million from companies including telecom giant Verizon Communications Inc. and networking-gear maker Cisco Systems Inc.,
The Wall Street Journal Law blog was even less charitable in its coverage last week quoting Myhrvold's candid comments on his patent licensing strategy verbatin.
Myhrvold told the WSJ that he acknowledges facing resistance from companies he targets for licenses. But his patent inventory gives him leverage to extract settlements without litigation. “I say, ‘I can’t afford to sue you on all of these, and you can’t afford to defend on all these,’” he said.
Heavy hitters at the table
So what is Myhrvold doing funding R&D for a new type of nuclear reactor? Well, for starters 30 engineers at a cost of about $200K each, not counting lab equipment, comes out to $6 million a year. The firm is spending money, but what's is it really up to? A science paper published in February 2008 provides a road map of the firm's ideas.
The reactor concept, which the firm recently publicly presented to the American Nuclear Society, would reduce the need for uranium enrichment and cut the risk of dual use of enrichment technologies to make nuclear weapons. Like all new reactor designs it faces enormous hurdles and a technology "S" curve for adoption that may stretch well into the second half of the 21st century. Only the world's largest philanthropic foundation, which includes Warren Buffet's money, could roll out a project with a rate of return that is measured in decades.
With Microsoft billionaire Bill Gates (right) pumping in money to the project from his foundation, the project leader at Intellectual Ventures expressed confidence the job can be accomplished in one lifetime. John Gilleland told the Puget Sound Sound Journal, "We have an unusual opportunity to steer things in a way that will do the world a lot of good."
Dr. Gilleland is a powerhouse in the reactor physics field. Anyone who wants to work on the new reactor design will need to be able to keep up with him. It is clear that Intellectual Ventures is going first class when it comes to staffing the project. Here's a quick snapshot of Gilleland's career.
Gilleland served as Bechtel Corp. Chief Scientist and Vice President and Manager of Advanced Energy Programs. From 1987 to 1991, he was U.S. Managing Director of the International Thermonuclear Reactor Program (ITER). During a 16-year tenure at General Atomics, Dr. Gilleland directed the construction of the a test bed for advanced fusion research. He holds a B.S. degree from Yale University and M.S. and Ph.D. degrees in Physics from the University of Michigan.
What's even more interesting is that the project has a top drawer profile at Intellectual Ventures. According to the Puget Sound Journal, Bill Gates is not only putting money into the project, he's also participated in brain storming sessions about the new reactor design. Reportedly, he is interested in reactors as a cheap source of power for the world's poor.
Why a nuclear reactor is not like software
As you might expect there is no shortage of skeptics that Intellectual Ventures is wasting its time and money on the project. Jon Phillips, who works on nuclear R&D at the Pacific Northwest National Laboratory (PNNL), told the Puget Sound Journal, "I wish them luck. It's not like coming out with a software package."
He said that introducing a new reactor design, particularly only that operates on radically different physical principles than a light water reactor (LWR), is a "daunting proposition."
Phillips points out that reactor designs evolve over time taking advantage of what is known about existing models. He's got a point. All three of the commercial reactors currently in design certification at the NRC reflect that principle. They include designs from the major vendors - Areva, Mitsubishi, and GE-Hitachi. The project at Intellectual Ventures has none of their corporate throw weight behind it.
Phillips is not alone in his skepticism. Denis DuBois, editor of Energy Priorities Magazine also analyzed the firm's R&D program. His assessment is that success is "decades away."
Risk is measured in decades at national labs
Intellectual Ventures isn't the kind of firm that usually talks about its business investments. However, with a boat load of coverage in the Wall Street Journal and the nuclear cat out of the bag, so to speak, the firm appears to be looking for a higher profile possibly as a recruiting angle.
What it is doing is what national labs usually do, and that is take on R&D projects that have such long lead times that no industrial lab worth its salt would even think about it.
Maybe the Department of Energy should talk to Myhrvold about its plans. Here's why. There is the financial meltdown on Wall Street, and the likelihood that federal funding in 2009 will be turned on its head because of the enormous scope of bailouts to financial firm. if I were a nuclear R&D manager at a DOE national lab, I'd get the next plane to Seattle to talk about joint ventures.
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