by: Andrew Allemann
Over the past decade large companies have turned to intellectual property as a revenue source. But most of the focus has been on monetizing patents and trademarks. Little attention has been given to internally-developed software, which isn’t necessarily patented. Out-licensing software is usually faster—and often more lucrative—than patent licensing campaigns.
Maximizing the commercial value of internally-built software begins with the Information Technology department. There are a number of steps IT departments can take to create software with a high likelihood of commercialization.
Over the past decade large companies have turned to intellectual property as a revenue source. But most of the focus has been on monetizing patents and trademarks. Little attention has been given to internally-developed software, which isn’t necessarily patented. Out-licensing software is usually faster—and often more lucrative—than patent licensing campaigns.
Maximizing the commercial value of internally-built software begins with the Information Technology department. There are a number of steps IT departments can take to create software with a high likelihood of commercialization.
1. Track return on investment of applications. Most organizations use business cases to decide which applications deserve IT's efforts. Use these business cases as a baseline, but follow-up with actual results.
2. Make software versatile. Avoid hard-coding business processes. A hard-coded business process must be completely re-written when used by another company. Use of variables and input options will allow the software to be easily manipulated for another company's processes.
3. Create web-based software when possible. The ASP software model is growing and easier to bring to market.
4. Use the most popular programming languages. Although this will improve chances of a successful licensing agreement, older languages do not preclude software from being commercialized. Most licenses are interested in licensing the process of the software and are less concerned about the actual code.
5. Limit use of Open Source code in software development. The General Public License (GPL) allows open source code to be used in software development, but there are restrictions when the software is sold. Having some open source code in an application does not prevent commercialization, but knowing the extent of use is important.
6. Retain rights on co-developed software. Many IT departments work with outside vendors to develop internal applications and systems. Ownership rights are usually detailed in engagement contracts.
By focusing on the beginning stages of internal software development, companies can maximize the commercial potential. Intellectual Property departments can use software licensing to show quicker results compared to licensing patents. Expect to hear a lot more about software commercialization over the next few years as companies begin realizing the benefits.
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