|
 |
 |
|
August 6, 2001 | By Pete Barlas
|
IBM Corp. doesn't sit on its laurels — or its patents.
Big Blue is one of a growing number of companies using the Web to license
and transfer technology patents for cash. Lots of cash.
Last year, IBM reaped $1.7 billion from licensing and transferring patents
on its computer technology to other companies. IBM's patents accounted for
15% of its profit last year, making the company the leading patent
provider in the U.S. among computer companies, says Technology Review
Inc., a magazine published by the Massachusetts Institute of Technology.
(See chart depicting
IBM's income from patent licensing and transfers.)
And more than 30 start-ups — which don't themselves own the intellectual
property rights to a slew of patents — are creating Web-based markets for
researching and licensing patents.
They're all hoping to get a piece of a market valued at $100 billion a
year in revenue, says Debra Logan, senior analyst for Gartner Inc., a
Stamford, Conn.-based researcher.
"It's a big market, and the Web is ideal for delivering that kind of
information," she said.
The start-ups come in different flavors. Delphion Inc., yet2.com Inc. and
PatentCafe.com Inc. provide patent data on a host of products and
services. Others aim at specialized markets. Knowledge Express Data
Systems focuses on the pharmaceutical industry. ChemicalPartners.com LLC
handles industrial chemical patents.
Jerry Rosenthal, IBM's vice president of intellectual property and
licensing, credits the Web for Big Blue's licensing success.
"If companies are searching for patents, it would help them to have that
information available online," he said.
Having patent information widely available on the Web also helped IBM beat
rivals such as Hewlett-Packard Co. and Compaq Computer Corp. in patent
licensing, says Technology Review.
IBM was one of the first companies to realize the potential of the Web as a
marketplace for selling patent licenses to other companies.
IBM is part owner of Delphion, which helps entrepreneurs and companies
locate patents.
Analysts say so far Delphion has the world's largest online patent
database, with 70 million documents. That includes 30 million patents. The
rest are technical reports and bulletins. The information comes from
government agencies worldwide.
IBM started Delphion in 1997 as an internal resource for patent
information. Delphion moved out on its own two years later. It has raised
$35 million from IBM and Internet Capital Group, a venture fund.
Delphion offers a one-stop shop that prevents companies from wasting time
developing a patent for a product that already exists.
|
"If companies are searching for patents, it would help them to have that information available online."
—Jerry Rosenthal, IBM
|
|
|
If they find a patent is already available, they can license it from a company like IBM,
says Rosenthal.
"You don't want to waste your time filing a patent for an invention that's
not new," he said.
Placing patents on the Web is akin to a company's holding a garage or
attic sale.
Many patents are ideas for products and services that companies developed,
but rarely use. Delphion provides a marketplace for companies to eliminate
waste and get cash from untapped assets, says Woody Ritchey, chief
executive of Delphion.
"Most companies use only 10% to 20% of their patents," he said. "They
don't think about offering them for sale to somebody else. That's what our
site allows them to do."
Delphion gets about 120,000 visitors a month at its Web site.
Since June, it's been charging $75 a month to search the site and $3 per
downloaded document. Users can pay $150 a month and get unlimited
downloads. It also offers a limited search of U.S. patents on its site for
free.
Other patent-related Web sites make money in other ways.
Patent & License Exchange Inc., a consulting and research firm, makes
money by licensing its patent management software. Its software helps
companies keep track of their patents to avoid redundancy in product
development.
Companies spend as much as 10% of their research and development funds on
redundant projects, says Nir Kossovsky, Patent & License Exchange's chief
executive.
"One group (in a company) will start a new project not knowing that
another group in the same company did the same thing three years ago and
got a patent for it," he said.
P&L operates a database of 5,000 patents available for licensing. It gets
its information from more than 500 business customers.
P&L also collects fees from customers for providing technical reports on
patents. The reports make patents more easily understood by companies
shopping for new technology, says Kossovsky.
"People are not interested in patents, they are interested in technology,"
he said.
Shakeout Ahead
Even though the market for online patents is growing, some consolidation
is expected.
Analysts say there's room for only seven Web companies to survive in the
online patent information industry. Their success will depend on whether
business customers will accept the Web as a storehouse for patent
information. Otherwise, the online patent industry will become another
casualty on the Web, like Net-based grocers, says Gartner's Logan.
"Their success will depend on how seriously companies take the service,"
she said.
An accounting rule change could help the licensing business.
The Financial Accounting Standards Board says companies must provide by
January the value of intangible assets such as patents on their balance
sheets.
The FASB ruling is designed to give investors a better understanding of
the true value of a company, says Kossovsky.
"Investors don't know what a company's real value is because of its
intangibles," he said.
Kossovsky says the FASB ruling will also be good for his business. That's
because more companies will seek help to put a value on their patents, he
says.
"The information is no longer 'a nice to have'; it's a 'must have,' " he said.
Used with permission from Investor's Business Daily.
[back to top]
|
|
 |
