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ICG, IBM Create Intellectual Property Marketplace

Internet Capital Group and IBM Corp. Wednesday formed a new company that will create an online marketplace for buyers and sellers of intellectual property.

ICG said it will invest $35 million in the joint venture. IBM did not disclose how much it would invest.

The new company, which has not yet been named, has acquired IBM's Intellectual Property Network (IPN) as the foundation for an online marketplace that will enable users to search, analyze, buy, sell and license millions of patents and other intellectual property across a variety of industries.

IPN, which gets about 1.3 million hits daily, will continue to provide free access to a wide variety of patent information, including U.S. patents, European patents and patent applications, patent abstracts from Japan, and other related information.

The deal is in tune with ICG's recent business deals, in which it invested chunks of money in B2B firms and online marketplaces over the past year. ICG made its last large play in March when the venture firm took a majority stake worth $657 million in software firm RightWorks to fortify its position as a leading provider of online marketplaces.

"Building this new company positions us to capitalize on an estimated $100 billion market opportunity in the historically inefficient intellectual property market," said John Hamm managing director at Internet Capital Group.

The intellectual property marketplace will be hosted by IBM Global Services and will use IBM's DB2 universal database technology, WebSphere Commerce Suite and other e-commerce-enabled software to give Web users secure access to as downloads of patent image files.

For now, the network will be accessible at IBM's patent site, after which time it will be moved to a new URL. The expanded site that the company is developing will launch in the third quarter. IBM plans to list more than 25,000 of its own patents. It is anticipated that other technology firms will be active participants in the exchange, which will be open to any industry.

Some of IPN's current employees have accepted positions as developers and managers with the new company, which will be headquartered in Chicago.

Tim Breuer, of IBM's Software Group, said the play was predicated on the fact that the intellectual property issue has not been addressed from an online business standpoint.

"It was just really inefficient for buyers and sellers to deal with intellectual property," Breuer said. "So we created an online marketplace for it, which is in its final stages."