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When times are lean, companies take stock of their inventory. This is particularly true in the high-tech sector, which has been hit hard and fast by the recent economic downturn. Barely more than a year ago, the average dot-com was brimming with youthful enthusiasm and great ambition. Nowadays, many in the technology community are just trying to survive. So how can a high-tech company weather this storm? First, by reassessing its core intellectual property assets, then by polishing the business plan to commercialize those assets. So, take stock: Identify and catalogue all proprietary technology and materials, including any that may be protected by patents or copyrights. Examine other proprietary intellectual property such as trademarks or trade names. And ask yourself, “Does this company have any trade secrets that might be marketable?” Trade secrets, confidential information that gives the owner an economic advantage over competitors, are sometimes overlooked as candidates for licensing because of their conceptual nature, and because companies sometimes fail to consider their value independently from other intellectual property assets. But there may be a company out there that has the resources to put your idea to work, with revenue-generating results for your company as the licensor. For example, a small company may be focusing on the U.S. market for its technology, but may have ideas for commercializing it on a worldwide basis that it simply can’t afford to implement. A larger business partner, with an existing international distribution infrastructure, can provide the wherewithal to enable both parties to capitalize on the idea. Before shopping your assets though, be very sure that you really do own them. Gather evidence that supports your claim of title to each identified piece of intellectual property, regardless of type. If your company is relying on assigned rights from employees, for instance, be sure such assignments are supported by written agreements and consideration where necessary. If a domain name has been identified as a potentially valuable asset, be sure to perform a trademark search to confirm its availability. Then ask, “Have I identified every source of revenue?” And decide whether these assets have more potential value packaged together or standing alone. Before considering an outright assignment of your rights in a particular asset, take another look at your current business plan and revenue-generating models. Various types of technology companies are effectively repackaging their offerings to find other ways to exploit what they already have. In the somewhat slippery arena of business-to-business exchanges, straight trading is out; value-added services are in. For example, to supplement its sagging revenue from transaction fees, VerticalNet, a business-to-business e-commerce vendor in Horsham, Penn., has started licensing software for its clients’ sites. This is additional revenue to go along with the transaction fees it already charges. Another company, Mountain View, Calif.’s business-to-business vendor Ariba, Inc., which operates in the supply-chain automated software and direct procurement area, moved from selling goods over the Internet to selling services. It did this by allying with e2open, a Belmont, Calif., company that offers an electronics marketplace on the Internet, and MatrixOne, a Chelmsford, Mass., company that provides supply-chain applications. Converting your goods-based business model to one that is services-based can be a lot faster when you partner with others. Whether through B-to-B or private exchanges, procurement services seem to be generating more interest these days from investors than traditional tech products. Similarly, the general trend toward outsourcing has led other, more traditionally product-oriented companies to move to an application service provider (ASP) model. That was the route taken by TellSoft Technologies, Inc., a Colorado Springs company that started by licensing server-based voice software to companies delivering audio online, but now delivers the same functionality as an ASP — saving its customers from having to acquire other IT resources such as additional servers and bandwidth. Another growth area is wireless communications. If your company is a content provider and is not in the wireless space, consider whether your content might work within — and appeal to — users on a wireless platform. Your company might be better positioned to offer services over products, through wireless instead of landlines, or vice versa. The point is: Consider all the angles. And that means asking the most difficult questions, like: “Is there someone else who can do it better?” If your company has tried to capitalize on your product or products and met with insufficient success, admit it — but don’t give up the ghost. The idea might still have licensing potential. Alternatively, your company’s underlying intellectual property may have value as an assignable asset. Although not a traditional exit strategy, licensing can be a viable alternative. This is especially true now that the days of quick-and-easy IPOs and mergers seem to be over. For larger, Old Economy companies with idle intellectual property — that is, intellectual property that it hasn’t commercialized — there are still some serious revenue opportunities. Incubators are seeking to gain access to undeveloped ideas from experienced research and development departments. So don’t think of the flagging economy as the dreaded enemy. It can actually give your company an opportunity to re-create itself — and shine. Though your instincts may tell you to run for cover and act conservatively, do the opposite. Count your assets, explore all your options, and be imaginative — very imaginative. When it comes to intellectual property, it’s not only what you’ve got, but also how — and who you can get — to use it. Kathryn Twiddyis an attorney in the Raleigh, N.C. office of Atlanta-based Kilpatrick Stockton.

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