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May 30, 2001
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Corporate Secrets Up for Grabs on Web Exchanges

Nov 15 2000 08:44 AM PST

About 20 marketplaces enable companies to buy and sell R&D secrets and intellectual property.

Computer World Partner
Companies (10)
Articles (3)
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Like most corporate giants, Procter & Gamble (PG) and General Electric (GE) used to guard their patents, trademarks and other intellectual property more closely than the crown jewels.

But now, under pressure to fatten revenue, they and other companies are offering everything from prized research-and-development secrets to in-house information technology systems for sale at new online intellectual-property exchanges.

The buyers are other big companies looking to slash R&D costs by buying the fruits of others' research.

About 20 such exchanges, including Cambridge, Mass.-based and Pasadena, Calif.-based Patent & License Exchange, have either been announced or are up and running. Last week, St. Cloud, Minn.-based Global Commerce and Communication leaped in with, a free online forum for buyers and sellers of inventions, trademarks and patents.

Also last week, in a slight twist on the same theme, Mountain View, Calif.-based launched what it calls a "people-to-business marketplace," where individual consumers and others can submit ideas and technologies to the people within companies who are responsible for new product development. Coca-Cola (KO), DaimlerChrysler (DCX), International Paper (IP) and S.C. Johnson & Son (dossier) are among the marketplace's inaugural corporate members.

What the business-to-business marketplaces offer, users say, is a fast, efficient and extremely low-cost way to transfer technology and build revenue on inventions that otherwise might not have seen the light of day.

"A year and a half ago, we did a survey and realized we were spending $1.5 billion on research and development, but we were using less than 10% of it in our own products," said Jeff Weedman, vice president of global licensing and external ventures at Cincinnati-based P&G.

The consumer goods giant, which holds 27,000 patents, has changed its intellectual-property philosophy dramatically. Now, all its patents as well as other technologies are available for licensing, sale or joint ventures, Weedman said.

So far, has signed up 56 members worldwide, including P&G, Toyota Motor (TM), Royal Dutch/Shell, Siemens (SI) and NEC (NIPNY) Technologies.

Companies pay about $10,000 per year to post an unlimited number of offerings on the exchange, according to CEO Chris DeBleser. After that, royalty fees on the sale of products incorporating a technology or patent range from 0.5% to about 3%. The exchange collects a finder's fee of 10% of the royalties. Some subscribers, including P&G, have also invested in the exchange itself.

P&G has not closed a deal in the four months it has been a member of the exchange, Weedman said, but it has been introduced to several potential buyers far afield of the consumer goods industry.

One example is a contact-lens manufacturer interested in licensing a biodegradable enzyme that P&G developed and uses in one of its flagship laundry products, Tide. As it turns out, the same enzyme that is effective in removing oil from laundry may make an excellent nonabrasive lens cleaner.

So far, has booked revenue of less than $1 million, according to DeBleser, partially because it usually takes six months for a buyer to implement new technology and an additional six months for new products to hit the market and build royalties for the exchange, he said.

Bill Heise, director of licensing at Eastman Chemical (EMN) in Kingsport, Tenn., subscribes to the Patent & License Exchange, which he browses regularly for potential technology buyers outside of the chemical industry.

Eastman owns about 1,500 U.S. patents. "I view the Internet as a vehicle to find the right people to license this technology," Heise said.

Eastman also uses proprietary measuring tools on the Patent & License Exchange site to get a handle on the financial value of various technologies, patents and know-how in Eastman's portfolio of intellectual property.

In addition to patented technologies, GE's Industrial Systems Division also plans to sell innovative systems its IT people have created that the company would never have thought to market otherwise, said Dave Christensen, manager of intellectual property at the business unit in Plainville, Conn.

Julia King writes for ComputerWorld Online.