Crain’s: Chicago’s tech companies innovating

thThis is story from Crain’s…

Midtronics Inc. came up with a way for a mechanic to safely work on a car battery without getting zapped. That’s not a problem with garden-variety, 12-volt batteries, but it’s a much bigger challenge with the 400-volt monsters that power hybrids and electric vehicles.

Cummins Allison Corp. invented a machine that can take pictures of currency and checks even as they fly past in a blur, and do it in a fraction of the time of older equipment.
Gogo Inc. figured out how to maintain a cellphone signal when the user is in an airplane traveling 600 mph between towers.
Who says all the innovation happens in Silicon Valley?
Those three companies finished at the top of Crain’s Eureka Index, our annual look at the most innovative businesses in Chicago and across the state. The rankings are based on an exclusive analysis of patents by Ocean Tomo LLC, a Chicago-based merchant bank that specializes in evaluating intellectual property.
The Eureka Index highlights both the prolific and the prodigious. It includes giants that produce the most patents, such as aircraft maker Boeing Co., and tiny private companies that do path-breaking work like PowerMag LLC, which is using magnets to heat buildings. Measures include the number of patents awarded, the quality of the patents and a company’s patent productivity.
Willowbrook-based Midtronics, which makes battery-testing equipment, had the highest-rated portfolio of patents granted in 2013. Ocean Tomo’s algorithms assess the uniqueness of an invention in a patent to judge its quality, or the likelihood that it will be developed into a product or maintained by the company, such as by defending it in court.
“If you look at the innovation on this list, we’ve got the latest in new technology, and it’s all happening here in the Midwest,” says Darius Sankey, managing director of Ocean Tomo. “We’ve got an impressive mix. It’s not as concentrated in one or two industries like Silicon Valley or Boston. But that’s Chicago’s strength—it’s so diversified.”

Chicago-based Boeing produced more patents, 760, than it did planes in 2013. By a wide margin, it topped the list of 166 companies that received at least three awards in 2013, according to data from the U.S. Patent and Trademark Office. (No. 2 was North Chicago-based Abbott Laboratories, with 576.) It’s the third year in a row Boeing finished in the top spot for total patents.
PowerMag, which is based in shared office space in the John Hancock Center, has just six employees but received seven patents last year for technology originally developed by a prolific Wisconsin inventor, Bob Albertson. That’s the highest output per capita of any company on the list.
Cleversafe Inc., a 10-year-old company that invented a new way of storing massive amounts of computer data, had the second-highest per-capita output at 64 patents per 100 employees. One of the most innovative computer-technology companies built in Chicago, Cleversafe more than quadrupled its patent output last year to 69. It was 16th in total patent output, despite having just 108 employees at the end of 2013. And it was 30th in overall patent quality. “Innovation drives differentiation for Cleversafe,” CEO John Morris says.

When you’re first to innovate in an area, it’s a lot easier to have high-quality patents.
— Doug Mennie, president,
Cummins Allison Corp.
Large companies such as Deerfield-based drugmaker Takeda Pharmaceuticals USA and Chicago-based cellphone maker Motorola Mobility also performed well. Takeda, which was awarded eight patents, was 12th in patent quality.
Motorola Mobility was 13th in per-capita output at about nine per 100 employees, in part because its patent production has remained relatively constant even as headcount has shrunk dramatically in recent years to fewer than 4,000.
Total patent awards in the U.S. rose nearly 10 percent last year to 302,948. Illinois companies received 5,375 in 2013, up 6 percent. Several people at local companies say their patent numbers increased, in part, because of improvements at the U.S. Patent and Trademark Office, which has sped up reviews and reduced its backlog of applications in recent years.
QUANTITY AND QUALITY
Cummins Allison pulled off the unusual trick of maintaining high quality while cranking out a lot more patents. The Mount Prospect-based company had the second-highest-rated portfolio, even though its patent output jumped to 38 last year from 10 in 2012. Quality usually goes down as the number of patents rises, which is why only one of the top 10 producers of patents, Abbott, is in the top 10 for quality. Abbott’s 576 patents, with an average score of 138, would rank near the top 10 percent of all U.S. patents.
Cummins Allison topped last year’s quality ranking.
“When you’re first to innovate in an area, it’s a lot easier to have high-quality patents,” says Doug Mennie, president of the company, which is best-known for currency-counting equipment but has moved into check processing in the past couple of years. “To take an image at low speed and low cost is easy. To take an image at high speed and high cost is easy. But to do it at high speed and low cost is very difficult. That’s what we’ve focused on in the past few years.”
<strong>Anand Chari, chief technology officer of in-flight Wi-Fi provider Gogo Inc.</strong> Photo: Stephen J. Serio
Anand Chari, chief technology officer of in-flight Wi-Fi provider Gogo Inc. Photo: Stephen J. Serio

Cummins Allison’s innovation also is easy to see in its products. Today, it’s selling $10,000 desktop equipment that replaced $1 million machines. The company, which has 500 employees locally and 1,100 total, spends about 20 percent of revenue on research and development.
HARDER THAN IT LOOKS
Itasca-based Gogo, which began developing technology to allow cellphones to work on airplanes more than two decades ago, has been pushing the envelope ever since. All that innovation made Gogo the third-highest-rated portfolio, according to Ocean Tomo.
“Aircraft is the last thing to be connected (to the Internet),” says Anand Chari, chief technology officer, who was Gogo’s first Chicago-area employee in 2006. The company now has more than 500 and will move its headquarters downtown from Itasca. He estimates that two-thirds of the employees have technical backgrounds. “The culture of innovation is out of necessity. . . . We’re in the early stages of in-flight connectivity.”
As more data—from movies to text messages—is traveling over the airwaves, Gogo is finding new ways to compress it. And the company has to make its onboard Wi-Fi gear work with both ground-based cellular towers and satellites.
Oakbrook Terrace-based Redbox Automated Retail LLC received a trio of patents last year related to its signature red kiosks that serve up DVDs and games. It wasn’t a big number of patents, but it vaulted the company to 10th place on the quality scale.
Those 44,000 machines have to be restocked and recalibrated constantly, and machines in different locations have different inventory. Using wireless technology, Redbox figured out ways to handle much of the work remotely. Recently, the company determined how to reconfigure components inside the machines to increase the number of discs they hold by more than 10 percent—without replacing the kiosks themselves.
“There are a lot of moving parts inside,” says Chris Kapcar, vice president of technology services at the company, a unit of Bellevue, Wash.-based Outerwall Inc. “People assume it’s less complicated than it is.”
STAYING AHEAD OF THE GAME
More than a decade ago, when the first Toyota Prius hybrids started showing up in the U.S., Steve McShane, CEO of Willowbrook-based Midtronics, bought one of the cars to see how it might change his business. The company manufactures equipment to test and charge batteries used in places from car dealerships to auto-parts stores.
“Because we had that Prius early on, we developed technologies that might address the challenges, which are quite different from (those of) traditional lead-acid batteries,” says Chief Technology Officer Kevin Bertness, who has been awarded more than 100 patents over the past 20 years at Midtronics. “Most of the battery voltages in electric vehicles are lethal. That creates some challenges for service. We didn’t know if it was a laboratory curiosity or if it was going to be real. By the time people got serious, we had our (intellectual property) stream in line.”

If you look at the innovation on this list, we’ve got the latest in new technology, and it’s all happening in the Midwest. We’ve got an impressive mix.
— Darius Sankey, Ocean Tomo LLC
Its new equipment is used by Nissan Motor Co. and General Motors Co. for their electric vehicles. Ford Motor Co., Honda Motor Co. and Mitsubishi Group are evaluating Midtronics’ machines. The company, which employs 240 people, is building an engineering facility in China.
“Our product, while it sounds mundane, it’s far from being commoditized,” Mr. McShane says.
Like Cleversafe (second in per-capita output in 2012), financial-trading software provider Trading Technologies International Inc. (first in per-capita output in 2012) and broadcast-technology maker Sportvision Inc. (15th in patent quality in 2011), Midtronics is a perennial standout on the Eureka Index.
But this year’s list features several newcomers.
Riddell Inc., a Rosemont-based maker of football helmets, was No. 5 on Ocean Tomo’s patent-quality index.
As concern over concussions mounts, the company has applied microprocessors, sensors, wireless transceivers and technologies from other industries to gather data from players on the field and transmit it to the sidelines. The technology was introduced a decade ago and used by about a dozen universities. Last year, the company introduced a less expensive version aimed at high school and youth leagues.
Riddell has increased its R&D staff, both inside and outside the company, by about one-third in recent years, says Thad Ide, senior vice president of research and product development. “Traditionally we were strong in testing, engineering and biomechanics,” he says. “Now we need software, firmware programming, electronics design.”

Guess who’s back…Chicago takes 2013 #1 metro rank for facilities

Illinois has been taking a beating the last several years, while surrounding states blowhards have done everything they can too kick a man while he’s down.  But Site Selection magazine says that the Chicago metro area “secured more corporate facility investment projects than any other metro area in the U.S. last year.”  Folks this is huge, Illinois and Chicago are the place to be.th-3

To view the full article in Site Selection click here.