The new business model marks what CATI representatives believe will be the next wave in acquiring unused patents and making them available to entrepreneurs or existing companies in southeastern Wisconsin.
It also marks the change in how CATI conducts business. Previously, companies donated patents to CATI that the organization would, in turn, license to entrepreneurs or established companies for further development or marketing. Companies that donated the patents could then receive tax credits.
While CATI will still accept donated patents, increasing Internal Revenue Service reporting demands have caused many companies to stop donating them.
To ensure CATI's patent portfolio continued to grow, Matthew Wagner, CATI's executive director, decided the organization should pursue joint ventures.
CATI, which was formed in 2001, is a nonprofit organization that promotes business and work force development and technology innovation in southeastern Wisconsin. CATI maintains a $40 million patent portfolio, containing about 39 patents available for licensing. Its patents are donated from companies including S.C. Johnson, Racine; Kraft Foods Inc., Northfield, Ill.; and Boeing Co., Chicago.
CATI received 11 patents from International Specialty Products (ISP), Wayne, N.J., in late July, its first joint venture. ISP develops and manufactures specialty ingredients for industries including personal care, pharmaceuticals, oral care, food and beverage, coatings and adhesives, alginates, household, industrial and institutional cleaning and agriculture.
The patents are designed to convert insect and weed-control chemicals into consumer and environmentally-friendly products, said Brian Curry, CATI's assistant director.
CATI executives are talking with several companies about licensing possibilities for the patents.
This is how joint ventures work: A company agrees to give CATI its unused patents. CATI then finds an entrepreneur or company to license the product to and take it to market. Once the company begins generating revenue, it pays CATI and the patent's developer royalty fees.
CATI representatives expect royalty fees in its deals to range from 2 percent to 10 percent depending on the patent and contracts.
Joint ventures are also less expensive for CATI than donated patents, Curry said.
Another change is that CATI no longer has to pay maintenance fees to the U.S. Patent & Trademark Office, Washington, D.C.
"The costs aren't bad until you get a large portfolio like ours," Curry said.
In the joint venture model, the company donating the patent maintains patent ownership and pays those fees.