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License to Profit

Could licensing your intellectual property provide the extra capital you've been looking for?

By David Worrell

Opinions expressed by Entrepreneur contributors are their own.

AmbientDevices is not your typical high-tech company. Thecompany's first product, the eerily glowing Ambient Orb, brokenew ground in the consumer electronics space and landed squarely onthe cover of the Hammacher Schlemmer catalog in May 2002.Building on technology first conceived at the MIT Media Lab, thecompany is not only turning out eye-popping products, but alsoturning heads with a business model that substitutes royalties forventure capital and helps launch new competitors.

Like many growing companies, Ambient has some key intellectualproperty-patents, trademarks and other "secret formulas."Most companies, however, would use such technology simply to temptinvestors and then squirrel it away from the rest of the world.Ambient turns that model on its head by eschewing investors whilespreading its technology far and wide through aggressive licensing.It's a strategy that squeezes huge economic value out of theAmbient patent portfolio and gives the company an important (andlargely passive) source of funds.

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