Most licensees continue to develop an invention to enhance the technology, reduce risk, prove reliability and satisfy the market requirements for adoption by customers. This can involve additional testing; prototyping for manufacturability, durability and integrity; and further development to improve performance and other characteristics. Documentation for training, installation and marketing is often created during this phase. Benchmarking tests are often required to demonstrate the product/service advantages and to position the product in the market.
Your role can vary depending on your interest and involvement, on the interest of the licensee in utilizing your services for various assignments, and any contractual obligations related to the license or any personal agreements.
Most licenses have licensing fees that can be very modest (for startups or situations in which the value of the license is deemed to warrant a modest license fee) or can reach hundreds or thousands of dollars. Royalties on the eventual sales of the licensed products can generate revenues, although this can take years to occur. Equity, if included in a license, can yield returns, but only if a successful equity liquidation event (public equity offering or a sale of the company) occurs. Most licenses do not yield substantial revenues. However, the rewards of an invention reaching the market are often more significant than the financial considerations alone.
What happens to my invention if the startup company or licensee is unsuccessful in commercializing the technology?
Licenses typically include performance milestones that, if unmet, can result in termination of the license. This termination allows for subsequent licensing to another business.