The R&D Tax Aspects of Advanced Apparel Technology
Wearable technologies have greatly advanced in recent
years. Following this trend, apparel has also
experienced novel strides both in materials and concept.
As the new era of apparel is ushered in, companies are
performing significant research and development related to
apparel innovation. Federal and state R&D tax
credits are available to help support these industry efforts.
The Research &
Development Tax Credit
Enacted in 1981, the federal Research and
Development (R&D) Tax Credit allows a credit of up to 13%
of eligible spending for new and improved products and
processes. Qualified research must meet the following four
Eligible costs include employee wages, cost of supplies, cost
of testing, contract research expenses, and costs associated
with developing a patent. On December 18, 2015 President Obama
signed the bill making the R&D Tax Credit permanent.
Beginning in 2016, the R&D credit can be used to offset
Alternative Minimum tax and startup businesses can utilize the
credit against $250,000 per year in payroll taxes.
- New or improved products,
processes, or software
- Technological in nature
- Elimination of Uncertainty
- Process of Elimination
Stanford University researchers, led by
Professor Yi Cui have developed a unique new material equipped
with silver nanowire fibers designed to reflect the body’s natural heat and increase
warmth. By utilizing ordinary cotton coated with
microscopic silver nanowires (AgNW), the material can trap up
to 80% of body heat while maintaining a lightweight,
Researchers from the university developed the material with
silver nanowires because of its ability to reflect infrared
radiation back to the body. Simply by adding 0.9 volts of
electricity, the material can reach nearly 104 degrees
Fahrenheit and even be used as an electric blanket. The
development of novel uses for silver nanowire also extends to
insulating buildings and reducing global energy usage.
Based in Baltimore, MD, Under Armour has
an increased focus on research and development. CEO, Kevin
Plank, says that the company has gone from employing no
engineers to having 100 on staff in the past year. Under
Armour is looking to attract even more tech talent as retail
and tech are becoming increasingly intertwined. The
company has seen 31% revenue growth as compared to the prior
year, apparel sales have climbed 30% to $707.7 million, and
footwear revenue has increased 55% to $85.8 million.
Compression shirt is just one of Under Armour’s apparel
advancements. The E39 is equipped with sensors that
track the wearer’s biometrics such as heart rate, breathing
rate, lung capacity, acceleration, body positioning,
and motion. With an accelerometer, microprocessor, and
built-in storage, the E39 can connect wirelessly to
smartphones, tablets, and computers.
At a 2014 event, Under Armour searched for engineers and
software developers involved in wearables, wireless, and
apparel based embedded technology to help athletes in fitness
assessment, training, recovery, and sleep analysis.
In addition to advancements in apparel, Under Armour is
working on developing a stronger online presence. In
recent years, Under Armour has acquired the online fitness
trackers MapMyFitness, Endomondo (European-based), and most
recently, MyFitnessPal. With the newest acquisition,
MyFitnessPal, Under Armour has reached 120 million fitness app
users. The company is working to develop UA Record, a
dashboard ecosystem which will integrate all of their digital
apps and “provide unparalleled data” says CEO
Plank. UA Record will be the largest digital
health and fitness community to date.
Created by Borre Akkersdijk, the BB.Suit is a novel
development that brings a new meaning to wearables.
Microprocessors and conductive copper yarn woven into the
fabric make this suit a GPS-trackable, mobile Wi-Fi hot
spot. Additional features include sensors that detect
pollution and clean the air around the person wearing it.
Utilizing 3D knitting machines, Akkersdijk threaded together
the materials which then debuted at 2014’s South by Southwest
Interactive and Beijing Design Week. In addition,
Akkersdijk and his research team are testing fiberglass yarn
for increased connectivity and developing an open-source
platform to communicate with app and microchip
developers. “When you have a software designer at his
computer and there is a knitting machine behind him, you get
unexpected crossovers”, says Akkersdijk, “That’s what we’re
trying to create”.
Patagonia, based in Ventura, CA, is also
investing in the new generation of materials. The
outdoor apparel company began looking for alternatives to using neoprene which was highly
toxic and not eco-friendly. Partnering with Yulex, an
Arizona-based biorubber supplier, Patagonia was able to
incorporate latex-free rubber into their plant-based wetsuit
which uses a desert shrub native to the southwestern U.S., the
guayule plant. The Nexkin® technology wetsuit has improved
elasticity, durability, and softness as compared to
traditional neoprene suits and has a much lower environmental
Skinteractive Studios works with wearable designs that try to
bridge the gap between tech and fashion and focus on more
practical themes. Biomedia designer and Skinteractive founder,
Amanda Parkes, has developed apparel innovations like a
piezoelectric dress which uses the wearer’s movement to charge
batteries, a solar bikini that charges a cell phone, a
thermochromatic paint dress that changers color as the wearer
walks, a leather jacket made from Kombucha, and a bra that
responds to body heat to mold to a woman’s shape eliminating
the need for underwire.
Fittersift, based in New York City’s
Garment District, has developed a men’s dress shirt that uses
“responsive textile technology” to convert unused body heat
into infrared energy. The infrared energy created by the
dress shirt could lead to increased blood oxygen levels,
improved circulation, and improved body temperature
Each shirt utilizes 13 thermoreactive minerals that work to
convert our body heat into useful energy. Additional
features of this American-made shirt include wicking away
sweat and controlling odors. The moisture-wicking
technology uses a blend of hydrophilic and hydrophobic fibers
to keep the body dry. The odor control technology
utilizes Polygiene, a silver salt (silver chloride)
antimicrobial made from recycled silver.
The new “Incredible” sports bra from Victoria’s Secret is
designed for high-impact exercises providing maximum support
and detachable electrodes that integrate with heart-rate
monitors. The sensors are located directly on the bra’s
brand so no additional belts or strap attachments are
required. The sweat-wicking, breathable padded bra is
also machine washable.
Microsoft’s Stress Monitoring
Microsoft is working to develop a
sensor-equipped bra that monitors mood and stress
levels. The bra integrates with a mobile app and can
alert the wearer when their mood changes.
Based in Washington, and co-founded by a former Microsoft
Executive, Sensoria Fitness offers a variety of advanced
apparel including smart socks, wearable anklets, sports bras,
and heart rate t-shirts as well as an app to sync your data
with. Sensoria’s smart sock is equipped with textile
sensors to detect foot pressure, conductive fibers to relay
data collection to the anklet, and a magnetic attachment to
easily connect to the anklet.
Symantec, known for its Norton antivirus and spyware products,
has partnered with online retailer, Betabrand, to develop an
RFID-proof pair of jeans to protect against personal data
skimming. Over 10 million identities are stolen every year and
an estimated 70% of all credit cards are vulnerable to credit
card skimming. Norton’s READY jeans are designed with a
silver-based material to block signals given off by credit
cards, passports, and other RFID tagged products.
The apparel innovations discussed above are
just some of the examples of how previously developed
wearables are being integrated into everyday apparel.
Concepts such as smart glasses, brain-sensing technologies,
smart watches, exoskeleton wearables, and smart helmets, have
laid the foundation for larger technology integration within
the apparel industry.
3D printing also plays a large role in the advanced apparel
industry. The increased design and manufacturing
capabilities that accompany 3D printing have allowed the
apparel and fashion sector to branch out into new
territories. 3D printing has particularly influenced
shoe design, accessory, and other apparel areas in which
traditional materials are combined with 3D printed materials
for a hybrid design. Footwear company, Delcam CRISPIN,
uses the hybrid method and design software to customize their
footwear for increased comfort. One Delcam CRISPIN
design involves half leather and half 3D printed shoes.
As the fashion, technology, media, and
other industries have expanded, the financial services
industry has contracted, prompting many fashion and apparel
companies to locate to lower Manhattan and fill this
gap. Companies like OSP Group, Brooks Brothers, Revlon,
and Vogue have recently made the move to downtown Manhattan,
“We realized this is where fashion is headed”, says president
of OSP Group, Stephanie Sobel.
The apparel industry is primed for larger technology
integrations. As novel ideas continue to develop, issues
arise such as machine washability, durability, and
comfort. Companies working to advance today’s apparel
and overcome these issues with innovation can be eligible to
receive federal and state R&D tax credits.