Good news: You don't have to reinvent the wheel

In today's global marketplace, innovation through the development of new products and services helps companies grow profits and creates new businesses.

Advertisement

For many companies, new product or service innovations typically come in two forms: internally through talented research and development personnel, or from outside acquisition, typically a university, federal laboratory or private industry.

With profit margins becoming slim, it is critical that businesses leverage all of their assets to the greatest extent.

Progressive, larger companies like Caterpillar realize their patents are valuable assets that need to be used just like equipment and facilities.

Caterpillar spends more than $600 million a year on research and development, resulting in thousands of patented technologies. The company's primary goal is to use those developed technologies for competitive advantage. In addition, the company tries to find new ways to use the technologies for alternative applications.

This latest wave in generating revenues is called out-licensing. For instance, a company may develop a new paint technology that reduces material waste. Could that same technology be used in other industries that are involved in large painting operations but are noncompetitive to the inventing company?

This process of allowing other companies to use your patents for a royalty fee is commonly referred to as out-licensing. Last year alone, IBM realized more than $1 billion through out-licensing.

So, is this the right move for your company? Do you have technologies that may prove valuable to other industries?

First, sift through your existing patents for technologies that appear to be broad in nature.

There are a number of good intellectual-property law firms and consultants to help you. A meeting then can be conducted to examine the relative strengths and opportunities provided by the patent technology and what industries might be interested.

Once targets are identified, these technologies can be marketed. A successful outcome would be a licensing agreement between the inventing company and user. The result is bottom-line impact with increasing royalty revenues coming from outside markets, without losing internal strategic focus on your own products.

Another strategy used by many companies to improve business performance is in-licensing, or looking to the outside for innovation resources. Most smaller companies are often without extensive research and development capabilities to invent products or services or to enhance existing products and one way to fill this gap is to attract technologies from others.

Many successful companies have been launched and expanded using someone else's inventions. Many biotech companies in and around the Madison area are the direct result of in-licensing UW-Madison patented research.

There are many sources for large and small companies seeking outside technologies, from universities to federal labs to other private industries and even web sites like www.yet2.com.

In Wisconsin, CATI, WARF and WiSys feature technologies available for in-licensing.

The benefits of in-licensing are many. They include potential research and development cost savings (depending on the stage of technology development), the ability to attract more capital by having secured a viable technology, and the potential to secure long-term market share through new product innovations.

The key to in-licensing is conducting proper due diligence on the viability of the technology and whether it is a proper match for your business.