The R&D Tax Credit Aspects of Wearable Technology

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        Wearable computing, or wearables, are intended to further minimize the barrier between people and the information they are in search of. Although the well publicized new Google glass product is getting tremendous media attention, various other new electronic wearable products are already achieving tens of millions in sales.

        This article covers five wearable product categories including:

  1. Smart Glasses
  2. Brain-Sensing Technology
  3. Smart Watches
  4. Exoskeleton Wearables
  5. More Wearable Developments

        Lastly, the article covers some of the privacy issues which may also require innovation related to new processes and safeguarding of personal characteristics.

        This is a new and exciting fast-growing product category where the concurrent research and development by many leading companies both large and small is driving tremendous technological innovation . These wearables are going to contribute to the advancement of big data. This innovation may be supported by Federal and State R&D tax credits.

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 criteria:
  • New or improved products, processes, or software
  • Technological in nature
  • Elimination of uncertainty
  • Process of experimentation

        Eligible costs include employee wages, cost of supplies, cost of testing, contract research expenses, and costs associated with developing a patent. On January 2, 2013, President Obama signed the bill extending the R&D Tax Credit for 2012 and 2013 tax years.

Smart Glasses

Zeiss Eyeglasses

        Zeiss, the world famous German optical company, has put the last and final touches on their new product, the Cinemizer OLED Virtual Reality video glasses. An OLED (organic light-emitting diode) is a light-emitting diode (LED) in which the emissive electroluminescent layer is a film of organic compound which emits light in response to an electric current. These video glasses have a head-mounted OLED display and come in an 870 x 500 version with a 3D image pumping through HDMI 1.4; this is to produce an advanced image quality while ensuring the best possible comfort and versatility.

        The Cinemizer OLED is designed for mobile use; it comes with an integrated rechargeable battery which provides up to six hours of viewing enjoyment even when away from the comfort of your own home. While on a plane for hours at a time, a person can watch a number of movies from their iPhone on the Cinemizer video glasses. These glasses can be associated to any Apple product, along with any smartphone, Blu-ray, gaming consoles such as PS3 or Xbox, PC & notebooks, and other devices. This product is made possible by an HDMI adapter, a video cable, and the optional iPod/iPhone adapter.

        These glasses are made to be comfortable on one's face. There is a soft silicon nose pad which allows the glasses to sit comfortably on the nose. There are also two soft rubber ear clips which intend for a comfortable sit, allowing the viewer to use the Cinemizer OLED for hours at a time. Many people today wear glasses, Zeiss allows for eyeglass wearers to enjoy the Cinemizer OLED; they can configure their prescription from -5 to +2 diopters in each eye.

        With head-tracking now in use, the Cinemizer can appeal to many different groups of people. For example, an architect can navigate through a not yet built house, navigating forward and back with a joystick. The Cinemizer has the potential to appeal to gamers, architects, even educators, who can use the glasses in the classroom.

Google Glass

        Google is still in development with their highly publicized new product, Google Glass. It is expected to be available to the public in stores around early 2014.

        What it looks like is glasses without any lenses. There's a battery and computer built into one of the sides. It has a small heads-up display above the right eye where a person views the "screen".

        It works by receiving voice commands by the user. There are about a half dozen commands that also appear as a list upon startup by saying "OK Glass." It has a 5-megapixel camera which can also record videos at 720p. It contains 16GB Flash memory synced with Google cloud storage. It can do things that the smart phones can do such as read emails, find directions, open a Google Hangout, take pictures, and search in Google without having to look down and take out your phone. In addition to the voice commands, you navigate around the Glass interface by swiping or tapping on the frame with your finger.

        Google Glass has been available to a very limited amount of users (about 1,000 over the entire United States) to try. There have been mixed reviews about the experience of Google Glass. Some people find that the more they use it in their everyday life, the more they enjoy it and find it useful while others feel that they expected a lot more from the highly anticipated Google Glass and it simply did not deliver. However, Dr. Christopher Kaeding, an Ohio surgeon, found Glass to be professionally useful as well as educational. He wore the device while performing ACL surgery and was able to record and share it with his Ohio State students. Students were able to watch an incredibly authentic medical practice and were able to learn from it. One day, Google Glass may even allow doctors to pull up x-rays, pathology reports, or reference materials literally in front of their faces.

        Furthermore, some have complained about the awkwardness of wearing these glasses over your eyes. They are not exactly inconspicuous and some insist that it goes against American fashion, making people (especially those who already do not wear glasses) less enticed to wear them. Yet, a few powerful women from Google Glass are trying to change that. Isabella Olsson, lead industrial designer for Google Glass; Jean Wang, hardware engineer; and Kelly Liang, director of business development are working on combining high technology with high fashion. The New York Times states that "Men outnumber women three to one in the tech field but women are leading hardware and business efforts for Glass, one of Google's biggest gambles." They are intending to target women as consumers to create a demand for the smart glasses and increase sales.

Google glass diagram

        Additionally, Google Glass was featured in famously fashionable Vogue Magazine. It was a trendy and sleek portrayal of high-fashion models wearing Google Glass. The twelve page spread was a motion to make the smart glasses look very fashion-forward and, consequently, desirable to potential consumers.

Brain-Sensing Technology

        The plethora of new brain devices will provide large volumes of human brain related activity which can be integrated into the federal government's current human brain initiative. Electroencephalography (EEG), the measurement and recording of electrical activity along the scalp, has been extensively related in brain-sensing technology.

        Computers have been inching closer and closer to our brains than we ever thought possible. Major strides are being made in using technology to identifying human emotion, sleep patterns, and mood. The results are being used for predictive analytics , fun, research, and for providing a way to better your health by learning about your mental patterns.

The Necomimi Brainwave Cat Ears

        Neurowear is a company located in Tokyo focused on the future of non-verbal communication. Their products are based on a person's biological signals, such as brain waves and heart beats. They have created the Necomimi Brainwave Cat Eats product and the Shippo Tail product. They are also working on a pair of headphones that play songs according to your mood.

        The Necomimi Brainwave Cat Ears look like a headband around your head which have furry cat ears (of your color choice) attached. They allow "your cat ears" to convey some of your thoughts, modeled after the way a cat might.

        When you put the forehead sensor on, it reads electrical impulses from the neurons firing in your brain. Your mental state moves the ears based on brainwave data. The headset uses attention and meditation algorithms to capture brainwave data and to interpret it. When the ears are perked up, the person wearing them is focused on something. The ears will perk up and wiggle when a person shows interest in something. The ears will wiggle when you're enjoying something, and when the ears are down you are relaxed.

Shippo Japanese Wagging Tail

        Shippo, also known as the Japanese Wagging Tail, is an invention from Neurowear that, similarly to the Necomimi Brainwave Cat Ears, can read the user's brain waves. Rather than using cat ears, it mimics a dog's tail wagging. The tail wags mechanically in response to a person's mood.

        The Shippo tail uses an electroencephalography device similar to the cat ears. By doing so, it reads electrical patters emitted by the brain waves in the range of 12 to 30 hertz. The brain gives off stronger waves when concentrating, and weaker when relaxed. With Shippo, relaxed users' tails will demonstrate "soft and slow" wagging, while concentrated users' tails will display "hard and fast" wagging. It also can connect with social media by using a neural application to read the user's mood. It is then shared to a map.

Mico Headphones

    Also developed by Neurowear, the Mico headphones are another unique example of wearable technology. The Mico headphones use a brainwave sensor to detect the wearer's mood. Then, the headphones play a song to match the person's mood using a smartphone app. Forget having to differentiate playlists for the gym and for times you want to relax. The Mico headphones may be able to detect what you want to hear based on how you feel.

Zeo Wearable EEG Headband

        This wearable headband measures brain waves during sleep. It can be used as a personal alarm clock and an online "sleep coach". The intent of the alarm clock is to wake you up without the tiresome groggy feeling in the morning. The headband uses special sensors to measure a person's brainwaves to determine their sleep stage. Sometime in the half hour leading up to the time you would like to wake up, the sensors will determine when you are in a light phase up sleep and wake you up gently.

        In addition to being a subtle alarm clock, Zeo also acts as an online sleep manager. It records data, provides you with a sleep score, and compares your sleep patterns to other people. This sleep manager can be used to help the millions of Americans with sleep disorders.

Melon Headband

        Melon is a headband that measures brain activity to help users understand and improve focus across many different types of activities. Melon is a headband as well as a mobile app that is designed to measure the user's focus during tasks. The user would let the mobile app know what they are doing and the headband uses EGG to measure brain activity. The Melon app tracks a person's focus level based on an analysis of their EEG. It then asks them do to quick things to see if they might help the person maintain more consistent focus, such as taking a quick walk or a five minute break. It then is able to measure whether or not the tip was effective for that person to focus better. This leads to more personalized suggestions as time passes.

        The company used Kickstarter campaign to fund their product. It well surpassed its $100,000 goal. At over $290,000 they just about tripled it.

Smart Watches

Sony SmartWatch 2

        On June 25, 2013 Sony introduced the sleek, water resistant second version of its SmartWatch technology, fittingly named SmartWatch 2. The touch screen wireless accessory pairs with your android phone or tablet anywhere within 10 meters.

        SmartWatch 2 advertises that it is useful for everyday life. It can be used socially, for business meetings, actively, on the go, and at home. The SmartWatch 2 is useful, for instance, in cases where you want to keep your phone in your pocket but still wanted to be alerted of calls and messages, adjust your volume on your music player, track your fitness activities, discretely check social media, and control your meeting presentations. There are 200 apps exclusively designed for the SmartWatch 2. When it's not connected to your phone, it works as a digital watch.

        Sony indicates that they are "continuing to work with [their] strong developer network to deliver ever more compelling smart watch experiences". Sony's research anticipates a profitable future, predicting that 41 million smart watches will be sold by 2016.


        The Pebble smartwatch initially sought $100,000 in venture capital funding and remarkably raised 10 million in 5 days using the on line fund raising platform Kickstarter. The concept behind the energy efficient Pebble is that certain users such as bike riders didn't want to lug around a hand held device just to check their E-mail or monitor a weather forecast. It is not meant to be as sophisticated as the smartphones; it is a water resistant smartwatch that reads out a text to the user, allows you to scroll through song tracks, see missed calls, and more. Its intent is to be convenient.


        The MetaWatch smartwatch is manufactured by a privately-held company focusing on reinventing the watch as a stylish and relevant mobile accessory. The company's founders, Bill Geiser and David Rosales, formerly led the Watch Technology Division for Fossil, Inc. Geiser and Rosales have been developing smart watches since 2002 and shipped the first consumer-oriented, Bluetooth 'connected' watches in 2006 . The thought behind it is that, similarly to pocket watches in the past, people are going to get sick of reaching into their pockets to get the information they desire. A simple glance down at their wrist is what the company believes consumers prefer. MetaWatch is an elegant solution for helping a person stay connected and in style when they are on the go. A simple glance at your MetaWatch tells time, helps you check emails, texts, weather, stock prices, and more.

Samsung, Apple, and Google's Smart Watch Rumors

        Samsung has confirmed in March 2013 that there is a smart watch currently in development. There was a recent trademark filing indicating that it may be called the Galaxy Gear. Based on the preliminary designs, it appears to have a touch screen display. They also have smartphone functions such as a speaker and Micro-USB. Images on the patent indicate a possible bendable screen with a flexible display. Samsung's executive vice president of mobile business said in an interview with Mayor Bloomberg: "We are working very hard to get ready for it. We are preparing products for the future, and the watch is definitely one of them."

        It has been widely rumored that Apple will also release a smart watch by the end of the year. Apple has a team consisting of 100 designers inventing a wristwatch-like device that may perform some of the tasks now handled by the iPhone and iPad. This product will likely not be released until 2014.

        Although Google Glass has been the focus of the wearable technology advancement, it is evident that Google filed a patent in October of 2012 to create a smart watch. Rumors suggest that Google partnered up with Motorola for the smart watch and, consequently, the device will be called the "Moto xWatch". The patent suggests that it will have a touch screen display along with sensors that anticipate what you want from the watch by measuring your movements. It has been said that when a person glances at it, it turns on automatically. It also possibly responds to voice commands.

        It leaves consumers itching to find out how these companies will set their watches apart & what will make each of them different from one another.


        In addition to smart watches, there has been the onset of health and fitness tracking through wrist bands. UP by Jawbone has created a wristband which tracts activity and recommends improvements in energy used, distance traveled, steps taken, elevation and sleep quality. LarkLife has produced a wristband which tracks basic health stats and recommends improvements. Mio Alpha has discovered a new strapless continuous, performance heart rate. This new smart technology is a dedicated heart-rate monitor. Additionally, Nike has created a wrist-mounted accelerometer that tracks activity levels and progress. The Nike Plus Fuelband has a pedometer and accompanying app that tracks steps taken, calories burned, and a measurement of activity called Nike Fuel.

Disney's Wrist Ticket System: MagicBands

        Disney's MagicBands are personalized technological wrist bands aimed at enhancing the Disney experience. The bands gather data about your stay and what you do in the hotels and parks on your Disney vacation. The MagicBands will have many uses throughout the park, such as unlocking the door for your hotel room, entering theme and water parks, checking in at FastPass+ entrances, connecting Disney PhotoPass images to your account , identifying guests' names, interests, and rides they frequent. They are also used in lieu of your credit card to make purchases without having to bring your card.

        Only small selections of people have been able to test the MagicBands as of now. The bands are said to be comfortable, useful with wait time for rides, customizable, water resistant for the pool and weather, and overall convenient. Fumbling for your room key or going through your bag to find the park passes or credit card can all be eliminated and rolled into one; all with a simple flick of your wrist.


        In Casio's opinion they have an advantage on other companies in the smartwatch field. First, they are more familiar with ruggedness and durability than its competitors. A smartwatch has to be able to survive water and rough physical power it may endure. Also, their batteries are longer lasting. Casio's batteries last about two years while competitors' batteries last only a couple of days. That can prove to be important because people are not used to charging watches.

        Most importantly, Casio is a surviving company even in the toughest of times. The company was founded in the ashes of World War II. They have survived the "calculator wars" in the 1960s and 1970s and come out on top. Casio continues to aggressively market new "smart" products such as their Casio G-Shock Bluetooth watch. Sales in digital watches now account for 85 percent of Casio's operating profit of approximately $206 million. The New York Time states that "Morgan Stanley MUFG expects net profits at Casio to jump almost 30 percent this year to 16.9 billion yen, thanks to the brisk G-Shock sales."

Exoskeleton Wearables

        Similar to an animal or insect's exoskeleton, an exoskeleton wearable is a computerized external skeleton-like design that protects and moves a person's body that in most cases cannot move on their own. Exoskeleton wearables give people who suffer from paralysis or physical handicaps the ability to use their bodies like they were unable to beforehand.


        Robotics is critical towards human exploration of deep space. NASA's X1 robotic exoskeleton may one day both help astronauts stay healthier in space and assist paraplegics. This device, weighing 57 pounds, is worn over a person's body either to assist or inhibit movement in leg joints.

        When used to inhibit leg movements, the robotic device would be used as an in-space exercise machine. It can also be used to assist movement in leg joints resulting in helping people walk again or for the first time. The device is worn over the legs and contains a harness that reaches up around a person's back and around their shoulders. The X1 has ten motorized joints total: four at the hips and at the knees, and six passive joints that allow for a person to sidestep, turn and point, and flex a foot.

        The exoskeleton suits that can give a person superhuman strength are in the works. The prototype soft robotic exoskeleton designed by a Harvard and Boston University team of scientists for a U.S Defense Department can be pulled on like a pair of pants, feeling very comfortable. As tested, it showed promise in initial test and could help aid paralyzed people, like soldiers and athletes. Experts hope to eventually merge the prototype exosuit with real clothing so it will become a second skin and benefit and aid paralyzed people, such as athletes, soldiers and those who cannot walk. "You can imagine something like a spider web that's integrated into tightly fitting pants," said Conor Walsh, a robotics researcher at Harvard University's Wyss Institute and leader of the team that designed and built the exosuit.

LUMO Body Tech LUMOback

        LUMOback is a new invention that is gently worn around a person's lower back and monitors posture. This strap lightly vibrates when a person slouches, remind them to sit and stand in good form. LUMOback tacks movements wirelessly and provides feedback via the LUMOback mobil App. This creation is to help change habits and improve posture over time.

More Wearable Developments

LiveMap Motorcycle Helmets

        Chief executive Andrew Artishchev compares his new smart helmet to the helmet from Iron Man. The helmet can't exactly fly around in the air, but its characteristics are seemingly beneficial for motorcyclists. Russian startup LiveMap is developing this motorcycle helmet with a built-in navigation system. It is aimed to help motorcyclists who otherwise don't benefit from touchscreen navigators nor paper maps. LiveMap's helmet will deliver full color, translucent pictures that are projected on the visor. It contains a microphone for voice control as it accepts voice commands. To help motorcyclists get to their destinations, it contains a set of earphones, a light sensor for adjusting image brightness, and batteries along with a G-sensor, gyroscope, and digital compass for head movement tracking.


        Memoto is a life-blogging camera that is only one inch tall and one inch wide. It was developed by a Swedish company that got a great deal of attention in 2012 after seeking to raise $50,000 on Kickstarter, but raising a monumental $1,000,000 instead.

        The device can clip right on a person's color or jacket. It can automatically take pictures every 30 seconds over the course of an entire day. The corresponding app organizes the images into a timeline and tags them with the appropriate GPS data.

        Memoto's CEO, Martin Kallstrom, believes that this type of technology can help people live in the moment rather than have to take the time out to grab their smart phones to take that perfect photo, rather than enjoy what they are doing.

Misfits Wearables

        John Sculley, former Apple CEO and Sunny Vu got together and founded Misfit Wearables. Their first product is a health monitor in the form of a sleek, metal disk called the Shine. It was originally funded with the help of an Indiegogo campaign that raised more than $845,000, surpassing its $100,000 goal.

        The Shine is as small as a U.S. quarter. It's small, sleek design is good for people who are not interested in a very noticeable wearable technology product. It could be worn subtly as a wristwatch, lapel, or necklace.

        The Shine's sensors track a person's walking, cycling, swimming, running and sleep patterns. This can help consumers make predictions about their lifestyle by helping them set goals and trying to live healthier. There is an option of using it with social media through an iPhone app and sharing your progress and data to the public. Its CR2032 battery in the device gives a long life of four months on a single charge.

        Shine will is newly available in Apple stores in the United States, Canada, Japan, and Hong Kong. It will be available to Europe and Australia in September 2013.

EdanSafe SmartCap

        Thousands fall victim yearly to accidents related with falling asleep while driving. To decrease those numbers and to keep truckers and road travelers safe, EdanSafe has developed a product called SmartCap. SmartCap is a baseball hat with brain sensors that measure the alertness, or lack thereof, of drivers. Drowsiness is measured through the person's brain wave (EEG) information. It is then wirelessly communicated to a display in-cab, or to any Bluetooth enabled device. This has been made possible by the development of small sensors capable of reading EEG through hair, without the need for any scalp preparation. When a driver becomes too tired, an alarm will sound and wake the driver up. This wearable could potentially save many lives and allow for safer driving conditions.

Privacy Challenges of Wearable Computing

        While wearables minimize the barrier between people and the information they are in search of, people are weary of how invasive some of these wearables can be. Between releasing personal information and being photographed without your knowledge and consent, wearables can make even an extrovert feel reserved about this possible invasion of certain privacies.

        For example, Google's creation of the Google Glass has stirred up a lot of questions. This device can be worn hovering above a person's eye capturing videos and pictures of whomever or whatever he/she becomes in contact with. There's no warning to anyone around you that you're doing so, no red light, no sound alert. That seems like a potential privacy concern. Since mobile phones became camera phones, there has been a drastic increase in online photo media. Even Memoto, the wearable previously discussed, is a tiny, automatic camera that looks like a pin a person can wear on a shirt. It can snap two photos a minute and can then be uploaded to an online service. However, many people are't comfortable with being photographed and recorded without their knowledge.

        There are two sides to the opinion of these new inventions. One side says that people need to accept that when you're in public, people are allowed to do, record, and photograph anything they want. Jeff Jarvis, author of the book Public Parts says "I don't want you telling me that I can't take pictures in public without your permission."

Wearables for Women

Wearable womens technologies

        The other side to this new wearable technology is that people are not happy with having their privacy invaded. Europeans in general have always been more concerned about personal privacy than Americans, which may prove challenging to global distribution of some wearable projects.


        The new wave of wearable devices is projecting to become a multi-billion dollar industry over the next few years. This rapidly emerging smart technology is driving tremendous technological innovation. This innovation may be supported by Federal and State R&D tax credits.

Article Citation List



Charles R Goulding Attorney/CPA, is the President of R&D Tax Savers.

Jennifer Reardon is a Project Coordinator with R&D Tax Savers.

Andrea Albanese is a Manager with R&D Tax Savers.

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