Licencing strategies
When a research institute chooses to commercialise its inventions with the perspective of revenue generation and technology transfer, it may have different licensing strategies. This section very briefly discusses the main options:
Commercialise the final product (the seed)
In plant breeding this means that the institute needs to have a seed production facility that is able to cover the market. Some countries (still) have public seed production infrastructure which produce seed of the public varieties. It is however quite uncommon that such seed programmes include a research-fee in the seed price (which is in fact an ‘internal’ royalty). Many such seed programmes use outgrower schemes that produce the seed under contract, while the programme takes care of processing, packaging and marketing and sales.
Commercialise the research product (the variety) by itself: exclusive or non-exclusive licenses
This option means that the institute licenses seed producers to multiply and sell the seed. Many public institutes consider it against their public role to issue exclusive licenses; i.e. that any seed producer that is interested in multiplying the seed gets the same contract (with the same license fee - i.e. 5% of gross sales). In some cases this may not create enough stimulus for seed producers to take up the varieties in the product portfolio. The alternative is then to grant exclusive licenses. This may create a complete exclusivity; i.e. that seed producer has the exclusive rights to handle that variety, or there may be geographic restrictions to the license, which creates a limited exclusivity, i.e. one variety is licensed to one seed producer for exclusive marketing in a particular province or a particular country. The breeder has to decide whether it wants to have an influence on the final seed price in the market. Public institutions commonly are under pressure to make sure that the seed is affordable for farmers; controlling the seed price may, however, not be the best way to maximise revenue.
Licenses that put additional responsibilities to the licensee
IPRs are private rights, so the holder of the right (the breeder) is in principle responsible for the commercialisation of the invention and the control of the market. This means that the research institute may need to employ controllers that know the seed market very well and that check on any infringements. Secondly, the institute needs to have the capacity to challenge alleged infringements - first through reaching amicable solutions, and if that appears ineffective, through court cases. This is necessary to protect the licensees. If the breeder does not take action, the licensee looses a market share and will not be willing to pay a significant license fee.
This is a heavy responsibility for a public research institute, which it can delegate to the licensee, i.e. the seed producer (who knows the market best) is made responsible through the license contract to identify infringements and to act on behalf of the breeder in such cases. The breeder just has to check whether the licensee keeps to the license contract (e.g. that he pays according to the quantities produced). The breeder needs to agree on these commercialisation strategies and oversee such actions to avoid potential negative publicity. This strategy is common, especially in markets abroad, where the breeder doesn’t have the capacity to follow-up on his rights.
Licensing as ‘technology provider’
Another step further away from the final user is the position of the institute as a technology provider only. This may be illustrated by a biotechnology invention which is licensed out to different breeders (e.g. in different countries) for a fixed price. This means that the institute has no control over the breeding strategies or the seed commercialisation strategies. It maintains a distance and simply ‘cashes in’ on the invention. It seems that some multinational seed companies are applying this strategy in e.g. China, where local companies can more easily follow-up on the rights.
Selling the IP
The most rigorous strategy is to transfer the rights to another party (which is similar to granting a lifelong exclusive license for a fixed price). This is the easiest way for public institutions that are not interested to build up a commercialisation unit to handle many license contracts and to deal with infringements. A famous example is the particle bombardment patent that Cornell University transferred to Dupont.
All the above options may be important in a public institute and operate side by side (for different inventions). This means that – based on an analysis of the potential importance of an invention, and of the size and complexity of its market (national - international, agricultural – other uses) the institute has to decide whether to sell it, to grant exclusive or non-exclusive licenses or to keep the commercialisation in its own hand. Such strategies need to be discussed early in the invention cycle, i.e. together or soon after the decision whether or not to protect a particular invention (and whether to publish or keep it secret as long as possible).
