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Like the rest of the U.S. textile industry, Burlington Industries has been hit hard by cheap foreign imports. The 80-year-old Greensboro, N.C., company is struggling to emerge from bankruptcy. And it’s pinning its hopes for recovery on a revolutionary new line of “smart” fabrics. The smartest thing about Burlington’s strategy is that it won’t be actually making these fabrics. The company is weaving IP deals, not cotton. In 1998 Burlington bought a 51 percent stake in a small nanotechnology company then called AvantGarb, now Nano-Tex. Nanotechnology is a broad term that covers the use of individual molecules to produce microscopic devices. Nano-Tex’s founder, David Soane, was using the technology in the early 1990s to research a cure for cancer when he accidentally discovered polymers that, when treated, produced whisker-like fibers that were 100 times smaller than a virus. At a colleague’s suggestion, Soane developed a method of chemically treating fabric so that these whiskers adhered permanently to it. The result: liquids simply rolled off the fabric, making it stain-proof. Soane has 30 patents for the technology and 100 more applications are pending. “Other technologies have been applied [to fabrics] afterward as a coating,” says Kathy Collins, vice president of marketing for Lee Jeans. “The difference [here] is [the chemicals] become part of the molecular structure of the fiber, so they will never wash out. And the fabric feels the same. It’s soft and breathable.” Lee is using Soane’s technology in its Lee Performance Khakis. Nano-Tex doesn’t actually make those pants, though. Burlington didn’t want to build mills or a plant to make the chemicals. Enter the lawyer. John Englar, Burlington’s vice president of corporate development and law had been with the company since he joined in 1978 as senior assistant general counsel. Englar had managed licensing deals before, but the Nano-Tex scheme was to be his most complex. Englar made Nano-Tex a virtual company along the lines of Cisco Systems. Cisco designs and markets routers for networks, but leaves the manufacturing, installation and service to others. Likewise, Nano-Tex licenses with chemical manufacturers worldwide to make the polymers and then buys back the chemicals and sells them to fabric mills. Nano-Tex reveals to suppliers the trade secrets necessary to create the nanofibers. The mills keep the manufacturing process a secret and sell only to Nano-Tex licensees like Lee and Eddie Bauer Inc. The licensees must also let Nano-Tex inspect their products for quality control. Nano-Tex requires all clothes treated with its polymers to bear its trademarks — Nano-Care, Nano-Touch or Nano-Pel. “We were looking for simplicity,” says Englar. “Instead of trying to count meters of fabric or units of garments made in China, it’s a whole lot simpler to collect your royalty and to make your profit on the front end through the chemical sale.” Englar and his team handle the legal issues related to contracts with the mills and the apparel makers. The company relies on firms in each jurisdiction to make sure its technology and trade secrets are properly protected under local laws. In the United States Englar has used the Washington, D.C., firms Arnold & Porter and Nixon & Vanderhye. In Asia he uses the Hong Kong office of Cleveland’s Jones, Day, Reavis & Pogue and Shanghai’s CMS Cameron McKenna. Nano-Tex believes the market for its formulas could be $2 billion a year, small change in the $1 trillion worldwide apparel industry. Dockers, Haggar and Savane are selling Nano-Dry dress slacks that whisk perspiration away from the skin. Maybe getting out of bankruptcy will be no sweat.

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