Risky business
However, many firms worry about the IP situation in China. A study among leading chemical companies in the United States and Europe performed by Accenture, a Chicago-based business and IT consulting firm, found that intellectual property theft was the No. 1 concern, as noted by 51% of respondents. Interestingly, there was a significant difference between North American and European executives&rsquo responses: IP theft was the No. 1 concern of 59% of U.S. respondents; only 29% of European respondents called it the top concern &mdash many more, 41%, voted for &ldquoachieving profitability” and &ldquomanaging inventory.”

A grudging acceptance of risk seems to be the pattern with companies that are setting up operations in China and other parts of the world with weak patent enforcement. &ldquoWe can see the value of conducting R&D in countries where the right laws are on the books,” says Dow&rsquos Story. &ldquoWhen China joined the World Trade Organization [WTO] in 2002, it was obliged to comply with WTO IP requirements. But the issue now seems to be enforcement, which seems to be spotty. We&rsquore constantly studying the situation.” Story adds that there are positive trends. Companies or individuals in China are being successfully sued for patent infringements or trademark violations, &ldquobut the penalties are so small that it&rsquos not much of a disincentive to them,” he says.

A similar view is held at UOP, Des Plaines, Ill., which receives the majority of its income from licensing process technology for refining or petrochemicals. &ldquoOur research is conducted primarily at our Des Plaines headquarters,” says Jennifer Holmgren, director of exploratory and fundamental research. &ldquoBut we license our technology all over the world; we have to do this [to serve customer needs].”

Speeding up the process
While patent attorneys and IP managers fret about the security of know-how in the global marketplace, a completely different driver is changing the shape of licensing and invention: the need for speed. Companies are looking for a faster payout on their IP, which is prompting a growing trend toward licensing and partnering. Meanwhile, the pace of invention itself is benefiting from improved laboratory techniques such as combinatorial chemistry and high-throughput experimentation (HTE).

&ldquoPatents have a short shelf life, and it is getting shorter all the time,” says Ben DuPont of yet2.com. In his view, a company should turn a new discovery in the laboratory into licensable technology as soon as possible and seek partners or customers.

the idea behind yet2.com, which was started in the heyday of the dot-com boom of the late 1990s and survived the meltdown that followed, is simple: A company with technology available for license can post information about it, allowing firms looking for know-how to check it out. In the past couple years, the site has added a &ldquoTechNeeds” service in which companies with technical problems can post a description and technology providers can offer solutions. Procter & Gamble, Cincinnati, for instance, recently licensed water-purification technology to Woogjin Coway, a South Korean manufacturer, and polymer know-how to Amcol International, Arlington Heights, Ill. P&G, which is one of the backers of the business, along with Bayer, Honeywell, Dupont, Siemens, and others, has also acquired technology via the site.

DuPont says that while his business has yet to meet its initial growth forecasts, it is growing nicely now. &ldquoWe are involved in about five conversations daily and we&rsquore closing two licensing deals a month with our clients,” he says. Depending upon the nature of the deal, we might get a royalty in addition to a commission,” he says. DuPont adds that roughly a quarter of the &ldquoFortune 500” are now members of the network of yet2.com users.

A similar pitch is made by another Web-based licensing service, innocentive.com, Andover, Mass., which matches up seekers with solvers. Chemical companies, which generally are the seekers, pay a fee and then post problems for which they are seeking solutions. Literally anyone could propose a solution; the seeker company then enters into a negotiation or development effort if it likes the idea.

Originally incubated at Eli Lilly & Co., Indianapolis, InnoCentive has since been spun off as an independent entity and has signed up Rohm and Haas and DuPont as corporate members within the past year. It also has agreements with research centers around the globe, such as the Indian Institute of Technology, Hyderabad, and member universities of the Russian Academy of Sciences, who are among its sources of solutions.

On the research-technology front, the combinatorial chemistry movement seems to be creating genuine excitement. the approach, which originated in the pharmaceutical sector almost two decades ago, now is gaining momentum throughout the chemical industry.

Combinatorial chemistry means different things to different researchers, but in most cases, the technology refers to a combination of molecular modeling and simulation on computers, used to set up experimental parameters or target molecules with an HTE machine that can test hundreds of small quantities of a reactant, catalyst or other material in a matter of minutes.

Symyx Inc., Santa Clara, Calif., for one, has been a major beneficiary of the increasing interest in the approach. During the past year alone, it has signed a $120-million, six-year collaboration with Dow Chemical, as well as pacts with UOP, JSR (a Tokyo-based rubber and elastomer producer), BP and Merck. It has a previously announced deal with ExxonMobil, covering five years and with a worth of $200 million.

With Dow, Symyx was able to expedite the discovery and commercialization of Versify catalysts for producing a new type of elastomer/plastomer. &ldquoWe went from an idea to a completed process technology in about a year and a half,” says Dow&rsquos Story. Now, a plant in Tarragona, Spain, is producing the material for clothing manufacturers.

A similar breakthrough occurred at UOP, which had developed a new catalyst, code-named PI-242, for paraffin isomerization. &ldquoWe went from a few hundred experiments per year with old technology to more than 100 per week with the Symyx instruments and software,” says UOP&rsquos Holmgren. &ldquoCombinatorial chemistry is going to be very big for us.”