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As in many other areas of business, the growth of the Internet has radically altered the landscape of intellectual property asset management. Data and tools that were once proprietary and restricted are becoming more and more available to everyone – from engineers to lawyers to business development managers. The Internet’s power to connect individuals is creating entirely new channels for the sale and license of intellectual property. IBM’s announcement that the corporation now generates more than $1 billion a year from technology licensing sent a resounding message to CEOs around the world, demonstrating the power of a strong IP management strategy. And with the spread of free and low-cost Internet-based information and tools, computerized IP management is no longer exclusively within the reach of Fortune 100 companies. The following are just a few of the online services available. PATENT SEARCH AND ANALYSIS Access to patent data has traditionally been delivered by a handful of specialty firms, including Derwent ( http://www.derwent.com/) and MicroPatent ( http://www.micropatent.com/). Originally making their databases available on magnetic tape in the 1970s, these companies now offer paid access to patent data via the Internet. They differentiate their products from publicly available government data with value-added services, including “scrubbing” of patent data, translation, and analysis. Scrubbing patent data usually entails some form of standardizing information. For example, DuPont may appear as an assignee in a patent as DuPont or Du Pont or E. I. du Pont de Nemours & Company; the word “Company” could be abbreviated as Co., Comp., etc. The value-added data providers attempt to alleviate these problems by including every permutation of a company name in searchable fields and by standardizing the names within the patent abstracts and claims. Along with these lines, they also correct spelling and standardize the format of patent information. The standardized format allows for better indexing and relational capabilities, which in turn permits faster searching and analysis. With the launch of the Patent and Trademark Office’s Web site in 1995, U.S. patents were available free via the Internet. Then IBM furthered the cause of free access when it launched its own Intellectual Property Network site ( http://www.patents.ibm.com/) in 1997. Designed as a showcase for the company’s DB2 technology, the IPN houses the second-largest database on the Internet, according to IBM. The site combines patent listings from the United States, Europe, Japan, and the World Intellectual Property Organization’s Patent Cooperation Treaty system. With about 1.8 million hits per day from about 90,000 user sessions, it has become a leading source of information for patent professionals, including lawyers, consultants, and engineers. Users of the site have free access to sophisticated searches, and can view and print patents. Those who purchase a subscription version (IPN for Business) can analyze relationships between patents, perform competitor analyses, link to technical reference materials, perform language translations, and use other functions. While paid-access companies tout their scrubbed data over the raw data available free from IBM and the PTO, the perceived value of scrubbed data seems to be diminishing. Such methods are becoming less critical as the power of search technology itself can alleviate the problems typically associated with literal searching. Aurigin Systems ( http://www.aurigin.com/), Manning & Napier Information Services ( http://www.mnis.com/), and Invention Machine ( http://www.invention-machine.com/) all incorporate natural language searching into their patent analysis tools. Current practice among IP professionals is to take a two-tiered approach to searches. Users will first browse the free databases for high-level information and a general understanding of the landscape, and then turn to the proprietary systems for detail and analysis. Given the declining value of the scrubbed data and the prevalence of free solutions, paid-access providers will likely begin offering their scrubbed data free as an incentive to drive traffic to their sites and encourage the purchase of other value-added information and services. The true power of the Internet in patent analysis is just beginning to be seen. Most commercial sites now integrate data from many disparate sources to provide new windows on the information. Take PatentInvestor.com, for example. By periodically capturing patent data from the PTO and marrying it with publicly available stock data, PatentInvestor capitalizes on the correlation between patent holdings and stock value. Users can search either by patent or by company, and receive a side-by-side listing of patent information and stock price for the assignee. Working on the theory that the PTO often grants patent approval weeks before a company announces it, PatentInvestor developer Kyle Farrell asserts that his site can assist in predicting the stock gains that usually result from such an announcement. TRANSACTIONS The power of the Internet as a tool for business networking and development is demonstrated by the plethora of IP transaction sites that have recently surfaced. The success of consumer-oriented auction sites such as eBay and business-to-business marketplaces such as Chemdex have inspired a number of players to create online marketplaces for the license and sale of intellectual property. Perhaps the most impressive collection online is housed within DuPont spin-off yet2.com. The new enterprise has enlisted a number of major companies – including 3M, Boeing, and Dow Chemical – to list portfolios of available intellectual property exclusively on the site. Yet2.com also recently unveiled advanced search capabilities that incorporate Aurigin’s Aureka search for worldwide patent searching. Other established firms are entering the online exchange space as well. PricewaterhouseCoopers launched the Intellectual Property Exchange ( http://www.ipex.net/) as a means for its clients to further extract revenue from their intellectual property by listing technologies both sought after and for sale. Ernst & Young is a partner in The Patent and License Exchange ( http://www.pl-x.com/). IBM has added transaction listing capability to its IPN in the form of Pink Dots, which indicate that a patent is available for sale or license. MicroPatent’s parent company, Information Holdings Inc., scheduled an April 2000 launch for its transaction site ( CorporateIntelligence.com). Looking to capitalize on this expanding market, a plethora of independent players have launched recently. Twenty-year-old entrepreneur Adam Pollock has set up zPatents.com, which provides independent inventors and small business owners with a quick and cost-effective way to take their inventions online. zPatents is focused on supplying industry with innovative products and solutions created mainly by the consumer. Even though patents from independent inventors account for almost 25 percent of those issued in the United States, most transaction sites have ignored this market segment in favor of large corporations and universities. Though these sites are quite nascent, and few deals have been transacted as a result of Internet listings, the grail for which they all strive is the consummation of an IP transaction completely online. But a patent license is much more complex than the sale of hard goods. The development of processes that will allow IP transactions to occur entirely in cyberspace will assuredly receive much more attention in the coming months. A VERTICAL PORTAL Many of the transaction sites have amassed a significant amount of intellectual property for sale, but what about the buyer side of the equation? And zPatents aside, is enough being done to help individual inventors, who may lack the sophistication required to maximize IP value? One Internet start-up is addressing these issues. “Though high-profile online exchanges have done an excellent job of enlisting the support of major IP holders, they have not yet focused on potential buyers and licensees of intellectual property,” says Michael Nicklin, CEO of Ventius.com, a new “vertical portal.” Nicklin heads a company that does focus on potential buyers and licensees – by leveraging the already established sites that list technology for sale. Ventius also hopes to accelerate the learning curve for IP transactions. Launched in March 2000, the site will offer Web-based education as well as daily news and in-depth articles and white papers to give novices and experts alike a single source of IP information. “Think of us as the Switzerland of intellectual property,” Nicklin says, referring to Ventius’ strategy of providing access to a wide range of data, tool sets, and transaction sites. Intellectual property can be viewed simultaneously as a horizontal function within an organization and as a vertical market. By viewing it as a horizontal function that cuts across many vertical industries, portals have the opportunity to connect IP professionals across the spectrum. Nicklin hopes that, while some IP transaction sites have begun from a specific vertical niche and grown outward, Ventius’ broad-based approach will allow it to reach across industries and build an online community devoted to IP. With the incredible increase in free and low-cost information and tools online and the rising number of companies reporting significant income from their intellectual property, there is no doubt that more and more businesses will incorporate IP management into their core strategy. Once accessible only to top-tier corporations, computerized asset management systems will proliferate. Given that 98 percent of companies who received patents in 1998 received fewer than 40 patents, the opportunity for growth in Internet IP management is exponential. Patrick Sullivan Jr. is a partner in the Palo Alto, Calif.-based ICM Group, specializing in helping clients extract value from innovation. Gary Bender is a manager in the San Francisco office of Arthur Andersen, specializing in intellectual asset management.

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