It used to be that corporations donated patents for the tax break. But that all changed in 2004 when as part of the American Jobs Creation Act, Congress essentially did away with the deduction. Now, though, a Wisconsin-based nonprofit is putting a new twist on patent donations by helping corporations find joint venture partners to commercialize unwanted IP.

The nonprofit Center for Advanced Technology and Innovation, or CATI, was founded in 2001 by a consortium of Wisconsin academics and work force and economic development organizations to stimulate innovation and new business creation in the state. E.I. du Pont de Nemours and Co., Kraft Foods Inc. and S.C. Johnson & Son Inc. are among the companies that have licensed patents to CATI as part of the JV effort.

"We understand what the technology can do, but we also understand where it fits in the marketplace," says Matt Wagner, executive director of CATI. "We don't get all gaga over the science. What it comes down to is whether or not it can succeed in the marketplace and generate revenue." Wagner says he aims to place technology in companies in the Chicago-Milwaukee corridor to fulfill CATI's economic development mission, but isn't limited to that region.

Here's how CATI's JV model works: Corporations grant exclusive, no-fee licenses to CATI, which uses the licenses to form joint ventures with area entrepreneurs and companies with the best shot at rapidly commercializing the patent. If a JV partner can't be found, CATI acts as an incubator, developing a business plan and building a management team. CATI takes a portion of the licensing royalties paid by the startup or small company back to the company who provided the patents. CATI, which focuses on late-stage technologies, generally earns royalty fees from 2% to 10% depending on the patent and contracts.

CATI established its first JV in July with North Carolina-based Bayer CropScience. The JV is based on a license granted to CATI by New Jersey-based International Specialty Products Inc., a $1.3 billion chemicals company. ISP has licensed 11 patents to CATI, including one that prevents pesticides from leaching into the ground. Before CATI turned to JVs, ISP also donated several patents to CATI's $40 million patent portfolio.

"It's my job to maximize the value of our portfolio, and we cannot commercialize everything [internally]," says William Davis, chief patent officer and associate general counsel for IP at ISP. "As we move forward with [patent donations], our preference would be to work with CATI or another technology incubator that's willing to take the technology and commercialize it, rather than sit on it for six months."

Davis says the tax savings associated with patent donations were minor compared with the potential market for ISP's chemicals if some of its patents are commercialized, so the joint venture structure works as well as the donation structure. CATI also saves Davis time and money because the business development aspect of finding a company to commercialize the patents is done by CATI. For him, CATI functions essentially as an outsourced IP licensing group -- one that doesn't cost him anything up front but has the potential to create a revenue stream.

CATI certainly isn't the only technology broker out there. Austin, Texas-based Fluid Innovation Group LLC, Maidstone, England-based Proven Software Solutions Ltd. and Apex, N.C.-based Fuentek LLC, along with bigger players such as Ocean Tomo LLC in Chicago and Brody Berman Associates Inc. in New York, offer patent brokerage services. What sets CATI apart is its nonprofit status, its mission to stimulate economic development and its ability to incubate technology and build management teams.

CATI's mission-oriented tech transfer model helped it land a contract with the Delaware economic development office. Under the agreement, CATI will evaluate the commercial potential of more than 200 patents donated to the state of Delaware by DuPont and Hercules Corp., a maker of chemical specialties. The Delaware office will then attempt to find area companies to commercialize the patents. If CATI's JV model leads to more rapid commercialization of patents, it may find more corporations signing on for its services as well. - Stacey Higginbotham

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