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Goodwin Procter LLP didn’t realize it, but it was sitting on technology for which other law firms would pay hundreds of thousands of dollars. A consultant hired to tweak the software powering the law firm’s corporate intranet told the firm that the application might be worth licensing to other firms. But at what cost to Goodwin Procter’s competitiveness? Stephen Charkoudian, a partner with the Boston firm, says the law firm was at first surprised but then had to weigh the pros and cons associated with giving potential competitors access to software that helped Goodwin Procter make its operations more efficient. “The real tension [in IP licensing] is around identifying what gives you an advantage in the marketplace and not giving that advantage up through licensing out those systems,” Char-koudian says. “You identify that which is valuable, but not so valuable that you are giving up your trade secrets.” In the end, the law firm decided that, for competitive reasons, licensing the software wouldn’t be a good idea. But as it weighed the issue, the conservative New England firm discovered what many other companies have realized: Intellectual property beyond patents could be worth hundreds of thousands or millions of dollars if packaged and sold to other businesses. But Goodwin Procter is not quite ready to take that step. Trudy Ernst, director of the firm’s knowledge management organization, says that as a business that deals primarily with intellectual property, a law firm must look carefully at the idea of commercializing its knowledge and selling it. Ernst’s division tracks all the innovations the firm comes up with that could make life easier for attorneys and keep them from reinventing the wheel for every case and contract. Generally, the IP the knowledge management group institutionalizes benefits the firm’s lawyers, or leads to services that are established to benefit the firm’s clients, such as private extranets for a client where they can track information. “It’s more business development,” Ernst says of the services. “Once you have the template established, the incremental cost is pretty minor, and producing the work for the client is something we charge for anyway, so there’s little additional cost.” Companies that make products, however, don’t have to face the dilemma of charging for their knowledge, and as such have long embraced the idea of commercializing intangible technology. “Commercializing software is an enormous trend,” says John Dull, the former head of licensing for E.I. du Pont de Nemours & Co. and now owner of IP consulting firm Fairthorne. “This trend started shifting in the late ’90s with a few large companies like Dow [Chemical Co.] and [Texas Instruments Inc.] reporting significant amounts in licensing fees and basically licensing everything.” But for companies interested in licensing everything, Sumit Sadana, senior vice president of strategy and business development at Austin, Texas-based Freescale Semiconductor Inc., has some advice. Freescale licenses some of its manufacturing process technologies to other companies, but never to competitors. And rather than sign an IP contract and gather annual IP licensing revenue, engineers from Freescale come as part of the license agreement. “What’s the point of giving them technology if you don’t show them how to use it”? Sadana says. He estimates a quarter of the company’s patents are in the process category and says licensing process technology accounts for a good portion of Freescale’s IP revenue. He did not disclose how much Freescale makes through licensing efforts, but it’s a “nontrivial amount of the overall earnings,” he says. “We’ve had more of a focus on our IP in the last three or four years,” Sadana says. “I think it accelerated as a way of counterbalancing some of the distress that [the semiconductor division] has been going through.” Copyright �2005 TDD, LLC. All rights reserved.

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