Basic commercial issues

We will now assume that the intellectual property (IP) you have generated has been appropriately identified, protected via a patent and packaged in a saleable format. This IP must now be realized in financial terms both to yourself, your institution and to the licensee(s). This requires a systematic quantitation of the value of the IP in question, decided not in isolation, but in comparison to similar technologies and as part of a business enterprise. The word ‘Value’ is chosen carefully and should be distinguised from, for example, price and cost. The value of your IP should be considerably larger than either of these, since it also reflects the potential future benefits from the use of your technology as part of a product or service. Remember, the initial IP is usually only a small part of this product or service. In determination of the value of your IP, the next step is to consider a schedule for payment. This is often expressed as a royalty, i.e. an amount of money transferred in proportion to the contribution of the IP to the final product or service. Royalties are often expressed either as a percentage of product sales in monetary terms or of the total number of units sold.