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United States companies are ignoring technology assets with a potential commercial value well in excess of $115 billion, according to a recently released survey.

A survey of United States company global intellectual property practices, reveals that these companies ignore more than 35% of their patented technologies because they don't fit into their "core" business operations. However, many of these so-called "orphan technologies" would have tremendous commercial value if they were licensed or sold. "Corporate America is leaving lucrative technology assets on the table," said Ian Harvey, chief executive officer of BTG (London, United Kingdom), the global technology transfer company which sponsored the survey. "Despite unprecedented pressures on management to maximize efficiencies and boost bottom line returns, many companies choose to ignore commercially viable technologies they have already developed. Selling or licensing their technologies could significantly bolster profits and maximize their return on R&D investment." Mr. Harvey added that if the mega-merger trend continues, it will inevitably lead to a dramatic increase in orphan technologies held by United States corporations. "The escalation of United States corporate reengineering is definitely taking a toll on intellectual property portfolios," Mr. Harvey said. "Many commercially viable technologies fall by the wayside when two companies merge because they are not part of the combined entity's core business. Indeed, it's conceivable that a serious 'innovation drain' could develop if the trend toward billion dollar mergers continues." The $115 billion estimate of ignored technology assets is based on the $550 billion spent by United States companies on research and development in the past five years and two findings from the survey: Sixty percent of R&D budgets are spent on developing technology in-house and more than 35% of the patents resulting from that in-house technology go unused. "Truth be told, the $115 billion estimate is exceptionally conservative because it assumes that a dollar spent on R&D yields a return of only one dollar," Mr. Harvey said. "The growth of the technology sector is ample evidence that the actual returns on R&D are dramatically higher." Economic data provided by Griliches, Pakes and Hall, in Economic Policy and Technological Performance, 1997, confirm Mr. Harvey's estimates, concluding that each dollar a company spends on new R&D increases the company's market value by $18.70. The intellectual property survey, conducted independently by the Business Planning & Research International (United Kingdom), reveals that United States companies are the global leader in the efficient use of patents and other intellectual property rights. Most United States companies said they only patent technologies which are believed to have potential for product development, while their Japanese and European counterparts said they obtain patents as part of a strategy to protect against competition. Indeed, the majority of Japanese companies reported that they obtain a large number of patents covering non-essential technology. Although more than one-third of the United States companies surveyed said that they found the idea of licensing unused intellectual property rights attractive in principle, most were unaware that licensing could be outsourced to specialists. Fewer than one-quarter of United States companies were familiar with specialized technology transfer companies and only 7% have actually used one to license out intellectual property rights. Japanese companies, which also find licensing attractive, are no more familiar with technology transfer companies than United States firms. Twenty-seven percent said they were familiar with such companies, although only 6% reported using one to license out technology. However, the situation is quite different for European companies, which are the least likely to find licensing attractive. More than one-third of the European companies studied were familiar with technology transfer companies and they were twice as likely as United States or Japanese firms to have used one to license out technology. The survey also found that one third of Japanese firms surveyed reported holding more than 1,000 patents that they do not use in their business, compared to only 7% of United States companies. All regions attached a similarly very high importance to R&D, with 98% considering it to be important to the future success of their organization; 71% of all respondents rate the protection of patents and intellectual property rights as very important and 24% rate it as quite important. Although 5% rate it as not very important, nobody thought it totally unimportant. BTG is a global leader in patenting and marketing intellectual properties rights for technologies that shape the future. The company acquires, develops and licenses marketing intellectual properties rights in innovative products and processes in the fields of electronics and telecommunications, biosciences and medical and physical sciences. With offices in suburban Philadelphia and Tokyo in addition to its headquarters in London, BTG capitalizes on a global network of contacts in companies, universities and research institutions to identify the most promising technologies and create the most advantageous licensing relationships. Since its founding in 1949, BTG has commercialized such major innovations as magnetic resonance imaging, Interferon and wide-spectrum cephalosporin antibiotics.
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Comment:US companies could sell or license interests in unwanted orphan drugs, producing interesting profits
Publication:BIOTECH Patent News
Article Type:Article
Geographic Code:1USA
Date:Jun 1, 1998
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