nowing the best manufacturing tricks has always been a great way to maintain a competitive edge. These days, those same tricks may help bolster the bottom line.

Consider these cases:

¶ Ford Motor, no longer content with the $3 million or so that it reaped each year from licensing its manufacturing processes to other companies, recently appointed Damian Porcari, one of its intellectual property lawyers, to be director of technology commercialization. His mission is to turn Ford's intellectual property into a $20 million a year business by 2005.

Advertisement

¶Caterpillar, also dissatistifed with the meager revenues that its two-year-old corporate licensing department gleans from Caterpillar's manufacturing expertise, now aggressively pushes its methodologies on the Web, through its home page and through Yet2.com, an Internet technology marketplace that Caterpillar partly owns.

¶In December, Procter & Gamble, a consumer marketing titan with little experience selling to businesses, contracted with KPMG Consulting to help find licensees for Power Factory, a method for controlling quality and minimizing equipment breakdowns. "We'll retain the patents, but they have the business relationships that can accelerate the licensing process," said Charles E. Eberhard, Procter's power factory program manager.

Gone are the days when processes, at best, yielded low costs. These days, companies want them to yield high revenues, too — so much so that some are even asking process engineers to take licensing potential into account as soon as they start designing a new method. "Our goal is clear," said Mr. Porcari of Ford, which is doing just that. "We want to sell things we never sold before, to more people, for more money."

Hard data quantifying how many manufacturers are licensing out process technologies is hard to come by. But experts say the anecdotal evidence is persuasive.

"I am definitely sensing that more manufacturing companies are licensing out patented processes," said Herbert C. Wamsley, executive director of the Intellectual Property Owners Association, a trade association with about 100 member companies.

Steven Y. Gold, a vice president at KPMG Consulting, said he was fielding more queries from companies that want help licensing out their cost-cutting tools. "They are recognizing that nonproduct technologies can be more than cost centers," he said.

The idea of milking patents for money is not new, of course. I.B.M., 3M, Xerox and numerous others have for some time sought opportunities to sell licenses for their patented technologies and products.

But until recently, companies have tended to confine such efforts to software, products and processes that they do not use themselves. What is new is the degree to which companies are seeking licensees for the technologies that they themselves rely on.

"We used to think of our intellectual property as something to protect," said Willibald G. Berlinger, corporate licensing manager for Caterpillar, which now licenses out such technologies as weatherproof controls for machinery. "Now we view it as an asset with the capacity to generate earnings."

The timing is no coincidence. The sluggish economy, with its deleterious impact on industrial sales, has given urgency to the quest for non-cyclical revenue streams that can quickly prop up profits without huge infusions of labor or capital.

But there are subtler motivations, too. Mr. Eberhard of Procter, for one, notes that licensing out old technologies can spur in-house engineers to create new ones. "If we push our existing technology into the market," he said, "our people will have to work harder to stay ahead."

There is a share price angle as well. The Nasdaq's meteoric rise and fall left more in its wake than shattered hulks of technology start-ups. It gave old-economy companies a new appreciation of how readily investors would flock to a company with a technologically flavored product portfolio.

Now those older companies hope that high-publicity sales of their intellectual property will persuade Wall Street that they offer the excitement of technology combined with the stability of a tangible product and a track record of profits.

"We see licensing as a way to make Wall Street view us as an intellectual capital company, not just a maker of big machines," Mr. Berlinger of Caterpillar said.

The trend is not without potential downsides. It can have a chilling effect on benchmarking, the widespread practice in which companies, motivated by pride and the desire to glean a reputation for excellence, freely share their best methodologies with others.

"The incentive to sell processes instead of giving them away may mean that traditional benchmarking is over," said Robert Sullivan, dean of the Kenan-Flagler Business School at the University of North Carolina.

Moreover, an increase in patents and licenses may spell an increase in lawsuits.

But neither lawsuits nor the specter of insularity is dampening the Rust Belt ardor for licensing. Many industrial companies are even seeking help from their own suppliers to reach customers outside their usual business circles. Ford, for one, is licensing some of its painting techniques and equipment to its own paint suppliers, and will collect royalties when the suppliers sell the methods to other companies within or outside the auto industry.

The relationships can sometimes bridge dissimilar companies. Procter, for one, has licensed software for controlling some manufacturing processes to Metler Toledo, which makes precision instruments. Metler has bundled the software into a package of quality control techniques. Metler handles sales and marketing, and pays Procter royalties.

Similarly, Caterpillar is collaborating with aerospace companies in hopes of interesting the Defense Department in using Caterpillar technology in new ground combat vehicles. The theory, Mr. Berlinger said, is that Caterpillar knows how to track equipment and inure it to cold, dusty environments, while the aerospace companies have the military contacts Caterpillar needs.

Increasingly, the manufacturers are also striking deals with consultants to customize their technologies for companies in other industries. Ford, which has already pulled in about $1 million by teaching other companies to use its method of "best practice replication" — a way of ensuring that efficiencies at one plant are used systemwide — is seeking a consultant to customize the training sessions and procedure manuals for many more clients.

"Intellectual property has been part of a cost center for too long," Mr. Porcari said. "It is finally going to be a profit center."