Accurately accessing the value of your technology and intellectual property assets is essential to maximizing your returns from these property interests.

How do I value my technology?

There are several ways to value technology in connection with its commercialization. First, an owner must determine the technology's position in the owner's overall product portfolio. Whether the technology is embodied in a primary or supplemental/support-orientated product or service will drive its value. Also, whether or not the owner's competitors have brought or will attempt to bring similar or competing technology to market will also determine a particular technology's value. Accountants can provide estimated revenue projections for a product and bring those estimates down to present day value. Finally, there are several published materials and sources that establish royalty guidelines for certain industries and products.

What types of compensation alternatives are available for commercializing technology?

Typically, compensation packages for the transfer or license of technology takes the form of one or more of the following schemes: (i) lump-sum payment, (ii) future royalties, or (iii) equity grants. Royalties can be based on numerous factors, including annual sales, a percentage of net revenue, and sliding-scale payments based upon minimum or milestone sales volume.

Are there guidelines for technology royalty rates?

Yes. There are several published guidelines and sources that establish benchmark royalty rates for certain industries and products (e.g., "Licensing Royalty Rates" by Battersby and Grimes).

How do I update the value of my technology?

By limiting the initial scope of use and/or term of a license arrangement, parties to a license can be sure to provide for set periods of renegotiation in the event the value of a particular technology changes.

What are the important considerations in marketing and distributing my technology?

Often an owner or developer of a particular technology is limited in the ability to aggressively market and distribute the products derived from the technology, usually due to a lack of experience and resources. Commonly distributors or sales representatives are used to assist with product distribution and sales.

In drafting marketing and distribution agreements, technology owners should be cognizant of several issues, including: exclusivity or nonexclusively of the rights to distribute and market, authorized channels of trade, licensed markets and territories, domestic and international compliance issues, rights to exploit derivative products, right to appoint sub distributors/representatives, rights to distribute competitive and related products and services, minimum orders and sales volume, limitations on internal use, combination sales with other products, price list changes, liability for damage or loss and freight/insurance, antitrust limitations on suggested retail pricing, minimum guaranteed purchases, rights to audit and inspect, warranties and disclaimers, agency status and authority to bind, distributor's best efforts to sell versus quotas, marketing commitment, conflict of interest, duplication rights, end user license agreements, reporting requirements, maintenance and service obligations, compliance with product marking, legal notices and registration in foreign territories, passage of title and intellectual property rights, confidentiality, termination rights, sales and use tax obligations, reversion of ownership and use rights, sell-off periods, return of marketing materials, assignment of discoveries, modifications and improvements, duty to notify and cooperate in instances of infringement, noncompete obligations, and trademark ownership issues, among others.