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If Hollywood did a movie about the rise of the patent licensing business, a pair of Texans would get a starring role. Dallas-based George Mahr and David Leonard were among the pioneers of pursuing cash on behalf of clients who wanted to license their patents. Since 1988, Mahr-Leonard Management Co. has represented everyone from National Semiconductor Corp. to Gilbert Hyatt, the inventor of the microprocessor. On their clients’ behalf, the company has negotiated more than $700 million worth of licenses — primarily from companies in Japan, Taiwan and Korea. The pair’s success — along with that of Jerome Lemelson, the inventor who made a billion dollars licensing patents for machine vision and bar code technologies — is something of an inspiration to newcomers in the patent enforcement field. “They see the Lemelsons and Mahr-Leonards make hundreds of millions of dollars and think, ‘If I’m unsuccessful, I’ll make $5 million,’ ” said San Jose, Calif.-based licensing consultant Mark Grant. The average license fee negotiated by Mahr-Leonard is $10 million, usually paid as a lump sum. The company initially received 15 to 20 percent of the licensing fee, but Leonard said their cut has climbed to 20 to 25 percent. The pair got their start in patent licensing in 1987, when Mahr was hired to launch SGS-Thompson Microelectronics Inc.’s licensing program. He brought in David Leonard, a patent attorney and former engineer at Texas Instruments, and within five months the two had collected close to $30 million for SGS. For most of its existence, Mahr-Leonard has handled other people’s patents — but that’s changing. As the patent enforcement business has become bigger and companies are more willing to fight, Mahr-Leonard is buying up patents to keep tight control of the litigation process and suing for licensing fees. “They are now much more quickly bringing in a New York lawyer to be aggressive and be totally uncooperative,” Leonard said. “I don’t want to spend 18 months to two years trying to license someone’s patent portfolio only to have the party say they won’t pay and the client say they won’t sue,” Leonard said. “You’ve spent two years and a lot of money for no return.” Leonard said he understands why his business is changing. When he started, only a few played the patent enforcement game and negotiations were friendly. But a whole host of patent enforcers are now pursuing licenses. “If I were to put myself in the shoes of big companies,” he said, “now instead of having Texas Instruments and Mahr-Leonard knocking at my door, a host of people are lined up knocking at my door.”

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