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11 IP commercialisation refers to the transfer of IP in return for payment, whether in cash and/or in kind. In the same way as a house can be bought and sold, IP can also be sold or transferred to another owner. This is called an 'assignment'. If the IP has been developed and has potential for business application, it may be appropriate to transfer the IP into a new, start-up company which is dedicated to its commercialisation. This is commonly referred to as a 'spin-out company'. IP can also be licensed. This is similar to the lease of a flat. The IP owner (the "Licensor") permits someone else (the "Licensee") to use the IP usually in return for payment. If the IP has been used to make a particular product, payment will often be made in the form of a series of regular payments, generally linked to sales, known as "royalties". In addition, IP can also be subject to an outright sale. What are the advantages of each route? If the IP is in a new field and has many potential applications, it could have enormous financial potential. As a shareholder in a spin-out company it would be possible for you to see significant capital gains from the sale of your shares. If the IP is a development or improvement of an existing product or process, then it is more appropriate to license the IP to an existing company who will spend the time and resources to implement or commercialise the IP. As the IP originator you would receive a share of the royalties. In general the returns from involvement in a successful spin-out are greater than royalties from a licence although spin-out returns tend to take longer to realise and require a much greater personal commitment. Also, the risk of a spin-out not being successful is higher. Both routes can bring other "benefits" such as case study teaching material and development contracts. Occasionally secondment to the spin-out is possible and when sufficient investment money has been raised, there is also the possibility that you will receive fees as an adviser to the spin-out board. The University's IP Policy explains in more detail how the royalty payments or shareholdings are allocated and can be accessed on the University's intranet or from: www.umip.com/ip-policy-executive- summary, where you can download the full document. 15