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26 July, 2006 - 06:22 By Staff Reporter

Bust-up forces Uni spin-out into insolvency

A High Court bust-up over the rights to potentially lucrative materials technology has forced a Cambridge University spin-out into insolvency proceedings, Business Weekly can exclusively reveal.A High Court bust-up over the rights to potentially lucrative materials technology has forced a Cambridge University spin-out into insolvency proceedings, Business Weekly can exclusively reveal.

British Titanium (BTi), which was suing University sister company, Metalysis and former UK government research organisation QinetiQ in the High Court has lapsed into administration under the financial strain of the legal proceedings.

None of the parties involved will comment, but we understand that the co-inventor of the technology – University of Cambridge don, Professor Derek Fray – is siding with the apparently vanquished BTi.

Metalysis maintains that Prof Fray remains chairman of its scientific advisory board, but this is titular at best, according to sources.

While apparently down and out, the backing of the technology’s inventor could hand BTi a number of alternative avenues of redress and also drag the University into the wrangle – something that it has assiduously tried to avoid up to now.

The writ made national media headlines earlier this year as it was issued just as QinetiQ was planning to launch a £1.3bn IPO.

It is understood that BTi could not meet the £470k legal bill for just the first phase of the litigation and as a result the Judge in the case, Mrs Justice Gloster, ruled that the claim be struck out and also that BTi meet the two defendants’ costs.

As a result BTi sought protection from bankruptcy in mid-June, effectively to buy it some time.

At the centre of the battle are rights to the FFC Cam-bridge Process for Titanium, a novel, low-cost way of ‘winning’ the super metal from its ore state.

Titanium can be used in a host of applications ranging from spy aircraft to replacement hips, but is at present difficult to extract from its ore. This makes it comparatively expensive.

British Titanium had been developing the FFC Process for titanium since 1998 under the auspices of a sub-licence, which it claims was terminated without notice in December 2005.

Metalysis chief executive, Dr Graham Cooley disputes this. He said: “BTi issued legal proceedings against Metalysis Ltd and QinetiQ Plc on 8th February 2006. This was despite several attempts by Metalysis to contact BTi to seek arbitration after the offering of a new licence to BTi – which was rejected out of hand.”

Metalysis was originally established in 2001 to commercialise the FFC Process for all metals with the exception of titanium, but was allocated the ‘head licence’ by Cambridge University in April 2005. QinetiQ was caught up in the affair because its predecessor, DERA was originally allocated the head licence before it was passed to Metalysis.

Metalysis acquired QinetiQ’s venture in the area, QinetiQ Titanium Products in January 2006 in an agreement which saw it take a stake in Metalysis.

It is not inconceivable that BTi rises Phoenix-like should it retain its rights to the technology. The company had been awarded a $1.4m contract from NASA to use the technology, which was cancelled following the legal dispute. However it was in the frame for a $4.2m follow-on award, which could be resurrected.

We understand that should its rights be reinstated, it could also possibly cash in on a £500k production licence.

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