Issue link: https://htpgraphics.uberflip.com/i/116731
Why License? Section 2 The income will usually flow to the institution as a series of payments (known as royalties) based upon a percentage of the sales value of the product or service of which the IP forms a part or (in exceptional cases) the whole. Sometimes an up-front payment can be paid (called a licence fee) to recognise the expertise and effort necessary in having created and in transferring the IP to the licensee (see Section 6 – Payment Provisions). It will be motivating for you to be able to see that your institution and school/unit have benefited financially from the successful commercialisation of the IP that you originate. You are also at liberty to place some or all of the money due to you personally into further research, which many researchers do, in order to enhance their research outputs (and which in turn may help with increased opportunities for promotion and for reputation by, for example, generating more quality research papers). Whilst for the "right" IP there are good chances to earn income from licensing, the returns may not start to flow regularly until a long time after the agreement to license has been signed. This is because the organisation to whom the licence is granted will most probably need to expend considerable resources in developing the IP that has been licensed before being able to commercialise it. Therefore not only will it be a while before royalties are due (probably several years), the share that your institution will receive from the licensed organisation (the royalty rate or level of royalties) is likely to be only a small percentage. So a typical arrangement could be: n Main agreement The licensee agrees with the research institution to take a licence on agreed terms, e.g. 5% of net sales revenue. Of course, although often conforming to typical industry norms/ranges, the royalty rate varies from case-to-case and will be the outcome of a negotiation. n Secondary (internal) arrangement The research organisation and the researcher have a standard policy of sharing, e.g. 50/50 of net income. Hence, after the deduction of patent costs, marketing costs etc. by the institution, the research institution and the researcher both receive 2.5% of the licensee's net sales revenue. The returns to an individual researcher from a licence of research-based IP can be attractive, although in general they are modest. 11