Universities are looking for new ways to monetize their IP. And not just the usual suspects, either. While the Ivy League and west coast institutions have long contributed to technological advancement, commercialization has not always been easy. For smaller, less established institutions to get in on the revenue generating fun, they’ll have similar IP monetization challenges to overcome.
Institutions new to technology commercialization can start with strategies to secure patents and maximize returns on investment. To adopt these, they’ll need to become more fluent in a number of economic domains including market dynamics, intellectual property law, and return on investment (ROI).
You’ve Patented Technology: Now What?
Being successfully granted a patent by the USTPO is a big accomplishment. But for a patent to fully benefit society–-and your university—you need to bring it to market.
An increasingly popular strategy among institutions experienced in bringing IP to market is the founding of small, nimble startup companies that benefit from the resources at the university. Then, they can take advantage of legal and business frameworks that allow them to operate in the marketplace like any other profitable company.
Determining a Patent’s Viability
If you’ve reviewed the patent landscape and decided that a long-term commitment should be made to establish or build on a monetized patent portfolio, there are several factors to consider. Bringing new technology to market is difficult and knowing about a patent’s marketplace viability ahead of time is vital.
The Foundations of Startups
Founding a startup has legal, financial, and societal benefits beyond other strategies of commercialization that include licensing and selling your patent. For years, the major IP-producing universities relied on conventional licensing strategies or the outright sale of their patents. However, these efforts can yield disappointing returns. Not to mention, third-party relationships can be unfair and hard to manage, especially when they are new to your institution.
Selling to partners or manufacturers can mean entering into uncertain long-term relationships with firms that do not always have your best interest in mind. And patent assertion entities are only useful to institutions with IP already being infringed upon and leave a lot of money on the table.
The university startup has emerged as an alternate strategy. This involves setting up an LLC or corporate entity under the university umbrella based on a patent or portfolio. The exclusive rights granted under patents combined with the legal permissions and protections of a business structure allow patents to be brought to market and mature as a commercialized enterprise.
The basic reason to invest in a startup is derived from the limitations placed on public and private universities’ experiences as 501(c)(3)s. This designation inherently limits revenue-generating opportunities. Most startups take the form of corporations or LLCs, with most university startups often choosing the latter because of a favorable tax structure. Your institution may also be able to take better advantage of state and federal tax benefits and other federal funds provided to research and commercial enterprises as an LLC.
Licensing and partnerships are still options as a startup and eventually as an established business, although now you are prepared to negotiate returns for your technology on equal footing. As an LLC, you can not only be in the business of selling your patents to entities designed to acquire and market technology portfolios with future revenue potential but act as one of these entities yourselves. The revenue potential of your patent may rise with the addition of related and downstream technologies that you can acquire on your own or partner with a firm to market.