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VOLUME: This is a key, but not determinative, factor. In licensing, as in other practice specialties, efficiency is one of the primary reasons to keep work in-house. For example, the oil industry produces a steady volume of licensing work, so many companies keep their licensing effort in-house, including Ashland Inc., Conoco Inc., Exxon Mobil Corp., and Phillips Petroleum Company. “We’re large companies with a steady load of work in this area,” says one oil industry attorney. “It’s just more efficient to do it ourselves.” MORALE: Some companies prefer to do the work in-house even when economies of scale aren’t present. “We don’t have enough work for a segregated staff devoted to licensing,” says Ed Levine, director of intellectual property law for Alcoa Inc. of Pittsburgh. But Alcoa does its own licensing anyway, says Levine, because the lawyers like it, the transactional experience broadens them, and both factors make the company’s licensing efforts more profitable. TECHNOLOGY: The biggest advantage that in-housers have over outside firms is familiarity with their company’s technology. The converse is that if there’s no knowledge advantage, it doesn’t make sense to keep the work inside. When the Chicago-based International Truck and Engine Corporation is working on a license, the pivotal issue is whether it relates to their core manufacturing business (the company specializes in diesel engines). If so, the deal is usually handled in-house, according to Kelly Sullivan, senior counsel for patents and trademarks. If not, out it goes. Technology is also directly related to cost. “Expertise in our field doesn’t exist in firms in Oklahoma,” says Allen Richmond, general patent counsel for the Bartlesville, Oklahoma-based Phillips. “We’d have to go to Chicago or the East Coast, and it’d be much more expensive.” Raymond Hollister, associate general counsel and director of patents for Moline, Illinois’s Deere & Co., agrees. “Outside firms could … [understand our technology], but why spend the money to bring them up to speed?” he asks. CORPORATE CULTURE: The key to a successful licensing practice is an environment that lets lawyers and business people work together. A company with strictly defined departments separated by high walls doesn’t have the synergy to make it worthwhile. As an example of the advantages that teamwork can bring, Alcoa’s Levine cites a long-running license between Alcoa and a Japanese company involving new product applications for aluminum, which he says requires an ongoing exchange among business people and lawyers on both sides. Alcoa and others have found that, given the right relationship between licensor and licensee, and between law and business, doing licensing work in-house is a win-win situation.

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