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
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 Yet2.com 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 NewIdeaTrade.com, 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 2000Ideas.com 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),
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,
So far, Yet2.com has signed up 56 members worldwide, including P&G, Toyota
Royal Dutch/Shell, Siemens (SI)
and NEC (NIPNY)
Companies pay about $10,000 per year to post an unlimited number of
offerings on the exchange, according to Yet2.com 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, Yet2.com 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
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
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
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.