Ratio of Sold vs. Unsold Patents

To determine how to use licensing-out to create value, company needs to formulate a licensing strategy that is consistent with its overall business strategy. Note that not all art offered for license is sold/licensed as shown in the “Ratio of Sold vs. Unsold Patents” figure. In fact some studies show as little as 1% of R&D efforts are monetized. Thus sorting through the following questions and issues begins the spadework of developing an appropriate licensing strategy: Does your company have the capabilities to develop the market through proprietary use of the technology as efficiently as a group of licensed competitors? Is it more profitable in the long term to be the dominant player in a smaller market than it is to be smaller player in a bigger market? Is a technology used in an underdeveloped market? Does a company want to create strategic alliances to minimize risks associated with penetrating underdeveloped markets? Does a company want to develop the technology as the industry standard? Could the company license technology in markets where it does not have manufacturing and marketing capabilities? Does a company plan to license core technology on lapsed basis? Are there any product lines that the company wants to protect? Are there any geographic areas the company wants to protect?