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Q: Issues of transferring technology within and outside an enterprise. ( Answered 5 out of 5 stars,   0 Comments )
Subject: Issues of transferring technology within and outside an enterprise.
Category: Business and Money > Economics
Asked by: smeski-ga
List Price: $100.00
Posted: 07 Dec 2005 11:23 PST
Expires: 06 Jan 2006 11:23 PST
Question ID: 602711
Compare and contrast the issues, opportunities and profitability of
transferring technology within a corporate entity and transferring it
to an outside enterprise?
Subject: Re: Issues of transferring technology within and outside an enterprise.
Answered By: wonko-ga on 08 Dec 2005 10:46 PST
Rated:5 out of 5 stars
Considerable risk and opportunity exists both when contemplating
technology transfer within a corporate entity and when contemplating
transferring it to an outside enterprise.  The biggest issue is
identifying which approach will be more profitable.  In many cases,
commercializing a technology in-house will be the most profitable if
it develops into a highly successful product.  It also eliminates the
risk that an outside company will use the technology to compete with
its original owner.  However, commercializing a technology is often a
risky and expensive proposition and can be quite costly if the product
does not succeed.

Another problem organizations can face is technologies that are
developed in-house may nonetheless not find a group within the
business that is eager to commercialize it.  Even technologies that
are widely used in-house and viewed positively may still encounter
difficulty getting a product group to risk developing it into a
product.  Research that is not closely aligned with the corporate
strategy and/or lacks an evangelizer to get other parts of the company
interested in it frequently is not successfully transferred. 
Inadequate capitalization to bring a product to market can also pose
significant obstacles where development costs are high and/or success
is very uncertain but highly profitable if it is achieved, a common
example being biotechnology startups.  An organization may also be
predominantly focused on research and uninterested in commercializing
technologies itself.  Examples include universities, government
research laboratories, and private research institutions.

These factors create an opportunity to transfer technology to outside
entities to boost profits.  Many companies have significant portfolios
of technologies they have not monetized.  Up to three fourths of
patents obtained by large companies in the United States are never
used or licensed for one reason or another.  This situation can result
in a sizable impact on a company's finances if they can figure out a
way to generate revenue from them.  Sales of unused or underutilized
patents, or even giving them away, can be beneficial.  Licensing
arrangements to allow for marketing of a new product in certain
regions in exchange for assistance with development expenses are also
common, particularly in the pharmaceutical industry.

"Many companies are sitting on unused patents that could be worth
millions. For example, IBM licensed its unused patents in 1990, and
saw its royalties jump from $30 million a year to more than $1 billion
in 1999, providing over one-ninth of its yearly pretax profits."

"Editorial Review of Rembrandts in the Attic" (2005)

"Annual licensing revenue for patents issued through the U.S. Patent
and Trademark Office increased nearly eightfold over the past decade,
from $15 billion in 1990 to$115 billion in 1999, according to the
licensing division of Connecticut-based information products and
services firm Information Holdings Inc.

Large companies such as IBM Corp., Lucent Technologies Inc. and Texas
Instruments Inc. each make as much as $1 billion annually in patent
licensing deals, according to those companies."

"Spinoff targets unused patents" by Mary Jane Credeur

"This morning, IBM said it is giving away rights to 500 of its
software patents to open-source developers. The patents span a wide
range of technologies, from data storage to networking to electronic
commerce, and IBM hopes they will beginning of a "patent commons,"
that other companies would join."

"IBM liberates more code for the proletariat" By John Paczkowski,
Silicon (January 11, 2005)

In this case, IBM believes that giving away rights to these patents
will benefit its business in the long run more than holding onto them.
 IBM has made a considerable investment in open source technologies in
the hope that furthering the development of open source software will
help it sell more hardware and compete more effectively in the
marketplace with computer companies whose equipment requires
proprietary software.

Although licensing technologies from other companies can result in
profitable new products, companies contemplating doing so must also
consider the risk of Not Invented Here syndrome.  Many organizations
are reluctant to incorporating outside ideas into key aspects of their
businesses.  In the presence of such a culture, acquiring technologies
from the outside may be a waste of money if they will not be used



Additional sources:

"Technology transfer: So much Research, So Few Good Products" by Ellen
Isaacs, Communications of the ACM (1996)

"1.5 Stakeholders, Decisions and Policies" Intergovernmental Panel on
Climate Change

"What is Technology Transfer?"  Welcome Trust

"Intellectual Property Hub Links Partners" By CHUCK MOOZAKIS,
InternetWeek (November 26, 2001)

Search terms: Selling unused patents; "technology transfer"
smeski-ga rated this answer:5 out of 5 stars
Good job!

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