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

investigator, or both, retain the right to decide whether the related entity will control
licensing. Unlike arms-length third party licensing arrangements, related licensing entities
are not typically subject to "march in" provisions.
entity.
This approach has the following attributes:
Value for capital formation:Varies.
Commercialization flexibility: Low.
Benefit to the institution: Varies, depending upon the aggressiveness of the related
Benefit to the investigator: Varies, depending upon the aggressiveness of the
related entity and the policies of the institution, from very low to moderate
Administrative burden: Low for the institution; high for the related entity.
Institutional risk control: High.
Institutional exposure to fiduciary liability: Low for the institution; low to moderate
for the related entity.
Institutional exposure to product liability: Moderately low for the institution;
moderate for the related entity.
C. INVOLVEMENT IN THE COMMERCIALIZATION PROCESS
The alternative to licensing the rights to commercialize a discovery is the
involvement of the agency or institution in the actual commercialization process, either by
bringing the product to market itself or in entering into some form of joint venture with one
or more outside entities. Instead of assuming the traditional role of passing the discovery
to a commercial entity through the vehicle of a license, leaving to that entity the risks -and
therefore most of the benefit -- attendant to commercialization, an increasing number
of agencies and institutions are maintaining an operational involvement with the discovery
through all or most of the commercialization process. On the one hand, this approach
allows the institution to substantially increase its share of the value of the discovery. At
the same time, the direct involvement in commercial activity opens the institution to risks
that are either not present or minimal in the context of passive licensing.
This is not to say that institutions ought not consider direct involvement in
commercialization. The benefits that can attend such efforts may be considerable, and
for certain types of discoveries the ongoing involvement of the institution can play a
critical role in the success of the commercialization process.
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