Challenges and Opportunities for Innovation in the Public Works ...

B. Licensing of Discoveries.
By far the most common way organizations are able to transfer discoveries into the
stream of commerce is through the negotiation of a license with a commercial entity that
will complete development and produce and market the resulting product. Such licensing
activities are carried out through several structural models, each of which has different risk
assessment attributes.
1. Direct licensing by the agency or institution.
The most straightforward licensing approach is for the institution to hold all rights
to the discovery and issue the license in its own name. The organization must determine
which discoveries are of commercial potential, secure appropriate patent or other
protection, identify potential licensees, negotiate a license and oversee the collection of
royalties and the protection of its rights.
The advantages to this strategy are its relative simplicity and immediacy of control.
Possible disadvantages include a lack of flexibility respecting the use of royalties (a
particularly serious problem for public institutions) and the absence of any insulation
between the institution and the licensee, as well as the substantial administrative burden.
The utility of this approach for capital formation is obvious: the revenue stream is generally
insufficiently defined to support debt financing and inadequate for immediate capital
development.
This approach has the following attributes:
Value for capital formation: Low.
Commercialization flexibility: Low.
Benefit to the institution: Varies.
Benefit to the investigator: Varies i om very low to moderate.
Administrative burden: High.
Institutional risk control: High.
Institutional exposure to fiduciary liability: Low.
Institutional exposure to product liability: Low to moderate.
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