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March 1, 2001
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On May 24, 2000, IBM spun-out a company called Delphion, which acquired IBM's existing Intellectual Property Network (IPN) to create an online marketplace for buyers and sellers of intellectual property. Internet Capital Group put up $35 million for a one-third stake in the venture, while IBM contributed the technology and about half of Delphion's 60-odd employees, which includes most of IPN's original development team from IBM's Almaden Research Center.
The IPN began as an initiative within IBM. In 1997, in response to the growing need of individuals, organizations, and governments for more efficient methods of exploring intellectual property information, the IPN was made available to the public via the World Wide Web. It has evolved into the biggest database on the web, with more than 40 million patent documents from throughout the world. According to Linda Fritzsche, Delphion's new VP of Marketing, the site receives over 100,000 visits/week.
With the promise of a $100 billion market opportunity, which is estimated to only represent a 30% market penetration, Delphion is positioning itself as a service company that provides access to its sophisticated search tools to all — not just IP attorneys. Individual entrepreneurs can do research free of charge on the site, and even the financial community can evaluate potential investments by checking to see how well protected the intellectual property assets are. While Delphion has several other competitors, none of them have anywhere close to the traffic and volume Delphion has. Therefore, the company believes it has the best opportunity to attract potential licensees to the site and its customers.
The website is hosted by IBM Global Services and will use IBM's DB2 universal database technology, WebSphere Commerce Suite and other e-commerce-enabled software to give web users secure access to fee-based services such as downloads of high-quality patent image files.
Currently, the database offers free access to:
- European patents and patent applications
- PCT application data from the World Intellectual Property Office
- Patent Abstracts of Japan
- INPADOC family and legal status data
- IBM Technical Disclosure Bulletins
In addition, users can pay for:
- Document downloads
- SSL connectivity
- Licensing buttons
- Patent file histories
Delphion believes it can provide a variety of customized, in-house solutions for the top 200 patent holders, including secure systems to manage internal IP assets, brokering services for potential licensing deals and even competitive business intelligence services to monitor patent filings. Delphion teams with the IBM sales force to sell IP Server products based on Lotus and DB2 for in-house systems to corporate users. According to Fritzsche, Delphion plans to eventually support other hardware platforms.
Delphion and IBM are also currently the only providers of system solutions to large national patent offices. (The top five national patent-granting authorities are in the U.S., Japan, U.K., Germany and France.)
The marketplace also sells licensing buttons for anywhere from $150 to $12,000 per year for one to unlimited buttons to attract attention to the sellers' patents by placing a graphic by each selected patent.
IBM is an anchor user of Delphion's services, but is primarily interested in its success due to its financial investment in the company. Fritzsche says that long-term success for Delphion depends on assisting other large patent holders to realize a truly strategic approach to IP asset management.
Delphion's business office is headquartered in Chicago, Illinois, while the engineering team remains in San Jose, California, with a small satellite office in The Netherlands.
©2001 Industry Dynamics. Used with permission. Industry Dynamics is a publication of Dainamic Consulting, Inc.
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