Wednesday, February 16, 2005

P & G's NEW LICENSING STRATEGY - COME ONE, COME ALL: A new corporate trend seems to be emerging in the land of IP licensing. IP Law & Business reports that Procter & Gamble, which was previously known as being extremely selective is granting licenses, has taken a more "open" approach to their IP, and it seems to be taking off.

Described as "open innovation," P&G's strategy is now taking hold at a number of leading companies. Few people thought of P&G as open in late 1996, when the company was forming a small intellectual asset management group. "At that time, we were totally focused on outlicensing stuff that P&G wasn't interested in," says Jeffrey Weedman, vice president for external business development and global licensing. "It's morphed an awful lot since then, thank goodness."

Weedman's first lesson in licensing: Most companies weren't interested in assets that P&G itself didn't want. On the other hand, there was plenty of interest in the rest of the patents in the portfolio. Weedman's group devised new rules: All patents at P&G can be licensed out either five years after they were awarded or three years after they were first used in a P&G product, whichever came first. Licensing royalties flow back to the business unit where the patent originated, instead of being claimed at the corporate level. Next, Weedman's group added in-licensing responsibilities, working with business units, R&D, and other organizations to find what they needed and to structure the deals to secure it. As of 2001, the business development group was on its way to being what Weedman says it is today: a "preferred portal" for anyone looking to work with P&G to create value.

P&G's competitors traditionally didn't bother developing new products to compete with P&G's. Instead, they now know that in three years--when P&G makes its patents available--they can piggyback on the company's technology. At the same time, P&G has three years to sell its new products without much competition.

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