- The Washington Times - Sunday, March 18, 2007

MILWAUKEE (AP) — Dilip Kotecha figured his working days were over when he retired from the food-manufacturing industry. But after an unused patent for instant yogurt landed in his lap, he couldn’t resist turning the dormant technology into a business.

“I would say our company wouldn’t even be there without that patent,” the 59-year-old entrepreneur said.

Countless patents — including the one used to start up Mr. Kotecha’s company, Yokit — sit unused when companies decide not to develop them into products. Now, nonprofit groups and state governments are asking companies to donate dormant patents so they can be passed to local entrepreneurs who try to build businesses out of them.

Mr. Kotecha’s patent covered the formulation of instant yogurt. Consumer-products company SC Johnson of Racine, Wis., was awarded it in 1984 but tabled its plans. Instead of gathering dust, the donated patent spawned a startup that Mr. Kotecha hopes will revolutionize the vending-machine industry and provide snacks to troops overseas.

Countless other promising patents sit idle, business developers say. In fact, 90 percent to 95 percent of all patents are idle, said Ron Sampson, the secretary of the nonprofit National Institute for Strategic Technology Acquisition and Commercialization in Manhattan, Kan.

“These technologies represent an important national asset, but the vast majority remain unused and eventually will be permanently abandoned,” Mr. Sampson said.

Companies used to receive tax benefits for donating patents, but Congress ended the incentive in 2004 after too many companies tried to unload useless patents with little chance of being commercialized. Now that federal tax breaks have been eliminated, there is less of an incentive for companies to offer unused patents.

Mr. Kotecha received the patent through CATI, the Center for Advanced Technology and Innovation. The Racine incubator acquired the technology from SC Johnson in 2002 and approached Mr. Kotecha because it knew he had experience in food manufacturing. CATI provided the patent to Yokit for a 5 percent equity stake in the company.

Unused patents are sought elsewhere, too. Judy McKinney-Cherry, the director of economic development for Delaware, said her state acquires patents and offers them to local citizens as a way to energize the economy.

“It’s a question of thinking strategically long-term,” she said. “You only need one or two [businesses] to hit out of 100 and you have a winner.”

Last year, Delaware received 255 patents from DuPont and five from chemical manufacturer Hercules. Neither company received federal tax benefits, but the state provided capital assistance for facility upgrades.

Delaware officials created a Web site where entrepreneurs can review and apply for the patents that the state has received from DuPont so far.

Why would a company spend money to research technology only to let the patent sit idle?

Procter & Gamble, which uses only about 7,000 patents of its approximately 36,000, patents any meaningful advance but acts only upon those that are aligned with P&G;’s long-term strategy, said company spokesman Jeff LeRoy.

“In some cases, we have a technology that for whatever reason we decide we’re not going to launch, or it needs more development beyond P&G;’s expertise,” Mr. LeRoy said.

In the past, P&G; donated patents, including one in 2000 that led to the launch of Nutrijoy, a Kansas company that sells nutritional drinks.

IBM Corp. has more than 40,000 patents, company spokesman Steven Malkiewicz said. Rather than give away idle patents, the company keeps them but allows some groups to use the technology free of charge.

“We believe this strategy helps generate new innovation and growth,” he said.

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