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15 February, 2006 - 09:43 By Staff Reporter

Fray-ed relationship as clash of the ‘titaniums’ brings writ

Two Cambridge sister companies could soon lock horns in a £230m High Court legal battle about rights to a revolutionary way to produce ‘super metal,’ titanium.
Two Cambridge sister companies could soon lock horns in a £230m High Court legal battle about rights to a revolutionary way to produce ‘super metal,’ titanium.

British Titanium (BTi), which has a Cambridge research and development centre, is suing recently-floated QinetiQ and metals start-up, Metalysis after BTi’s rights to commercialise the titanium processing technology were terminated.

BTi and Metalysis are from the same Cambridge University stable – the Department of Materials Science and Metallurgy.

While QinetiQ puts a figure of £230m on the lawsuit, BTi’s chairman and CEO, James Hamilton told Business Weekly that the claim is "unlimited" and is seeking redress for the loss of future investment and profits.

BTi had sub-licenced the technology from the Defence Evaluation and Research Agency (later to become QinetiQ) but this was recently revoked and as from 2005, Metalysis now holds the ‘head licence,’ covering all metals including titanium.

To add spice to the technology turf war, Cambridge academic, Professor Derek Fray is caught in the cross-fire, having been closely involved with both companies up to now.

Prof Fray, who until recently was head of Cambridge University’s department of materials science and metallurgy, is chairman of the scientific committee for Metalysis and a non-executive director at BTi.

He said he was "unable to give any further comment" about his future role within the companies when approached by Business Weekly.

The two businesses had been described as "sister companies" in some publicity material and share a common investor in the form of Cambridge-based Generics.

The high-stakes legal battle centres on rights to the ‘FFC Cambridge’ process, technology developed by Prof Fray while investigating ways to remove scale from titanium when heated in air.

The technology greatly simplifies the process of ‘winning’ metals from their oxide or ore forms, without the need for heating or noxious chemicals.

The one-step solution involves the metal oxide powder being added to a salt bath and reduced directly to metal powder through the application of an electric current.

Its simplicity means that it typically reduces production costs by about 40 per cent and also opens the door to the creation of hitherto impossible alloys.

A great deal of the research has centred around titanium, but the FFC Cambridge process also works for a wide range of valuable metals.

Metalysis was established in 2002 with a licence granted by the University of Cambridge for all non-titanium metals.

This was expanded in 2005, as part of a £5m VC round, to incorporate the rights to also exploit titanium.

Meanwhile, British Titanium, which sub-licenced the exclusive worldwide rights for titanium specifically from QinetiQ, had its rights terminated.

Hamilton told Business Weekly that the action had already been lodged with the High Court, although a court date has not yet been set.

While he would not comment directly on the specifics of the claim, he said: "£4.5m has been invested and I have spent over eight years of my life on developing this technology.

"And if it hadn’t been for the efforts of Peter Fray and his team it would have cost us an awful lot more to get this far. We strongly believe in our claim."

He went on to say that the matter "would certainly not help" when asked about the case’s impact on British Titanium’s ability to secure further investment.

On the record comment was difficult to come by: Metalysis management failed to respond to emails, while calls to their offices in South Yorkshire were directed to QinetiQ’s press office.

Cambridge University itself is not being sued and there are no plans to do so, according to Hamilton.

When approached for comment on the matter, the University issued the following statement: "The University has received no notice of legal action and, in light of the sensitive nature of the issue and the number of parties involved does not feel it would be appropriate to comment at this time."

Cambridge law firm, Mills and Reeve, which handled Metalysis’ 2005 £5m VC round, was similarly reticent, saying "that as a matter of policy, we do not comment on client matters."

Titanium and its alloys’ strength, light weight, resistance to corrosion and bio-compatibility mean that it is in demand in applications ranging from aerospace and automotive to sports equipment and replacement hips.

It is the ninth most common element in the Earth’s crust, but the difficulty in extracting it means that it remains comparatively very expensive.

The action forced QinetiQ to issue a supplement to its float prospectus in order to assuage City fears.

A strongly worded statement read: "The directors believe, having taken legal advice, that BTi’s allegations are unsubstantiated and without merit and that the quantum of the threatened claim is spurious, speculative and without basis."

The float eventually went off without a hitch, debuting at the top end of estimates at 200p, raising £617.5m and valuing QinetiQ at £1.3bn.

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