Patent Donations

Most of my columns are aimed at helping companies grow through the technology transfer process. We have covered the process of acquiring technology as well as examples of currently available, licensable technologies.

In recent years, companies have taken an interesting twist towards the technology transfer process to derive benefits from their intellectual property assets by donating patent portfolios to non-profit organizations. These donations are not just acts of good will. Corporations have been deriving significant financial benefits through tax deductions on the value of these portfolios. The receiving groups, usually universities, also hope to benefit by utilizing the portfolio to enhance their existing research programs and eventually to obtain licensing income from them.

Managing intellectual assets: Managing intellectual assets is an important factor today in a company’s overall strategy. Most companies have neither the resources to develop all the discoveries in their patent portfolios, nor do they all fit with their strategic objectives at any given time. An intellectual asset audit should put a company’s holdings in one of several categories: in use (hold and consider license); no interest (abandon); defensive (hold); license or sell; and donate.

What are the factors that influence a company’s decision to donate or license their intellectual property? One of them is the increased cost of maintaining patents. Fees for patent maintenance in the United States tripled in 1992. Companies spend a considerable amount of money to maintain the patent after 3, 7 and 11 years of each active patent that they own. Therefore, the value of the patents to the company’s current and future operations must be weighed against the cost to maintain them. The non-profit beneficiary of a donation has about half the maintenance fee burden carried by the large for-profit corporation. On close examination of their intellectual assets, many companies are finding it useful and financially beneficial to shed their underutilized or non-strategic patent holdings by licensing or donating.

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