Dear Andrew,

Your instincts are generally right--this is a matter of negotiation.
There are and I hope never will be federal guidelines that control
price-setting, except the one that allows not-for-profits to negotiate
these licenses in the first place! However, numerous factors tip the
scales one way or another. Is the license for something which is the
basis of a stand-alone product far superior to any foreseeable
competition, already ready to deliver to an eager market, or will
hundreds of millions of dollars be required to prove, scale up, and
manufacture before it can be sold? Is it one piece of a jigsaw
puzzle--valuable, but useless by itself? (Do all the contributors of the
other pieces of the puzzle also expect 50% of the sales price?)

With that standing in for volumes of books, articles in les Nouvelles,
the journal of the Licensing Executives Society, and years of traffic on
the list-serv for the university licensing community (techno-l;
normally, I would just cross-post for you, but the question in this form
is too vague)--50% is likely to be much higher than any company would be
willing to pay, and 20% sounds great! Many university licenses
(considering all of the above and more) are for 2-10%. But one still
must ask, 20% of what? Verifiable? What other terms: An upfront payment,
"milestone payments" prior to actual sales, to help keep the project
moving forward, with the right to reclaim rights if the company doesn't
follow through? Professional help is recommended.

> I'm looking for some guidance on the question of royalties to be specified
> in a proposal for a contract between a higher education institution and a
> company.  The institution is seeking royalties on potential patentable
> outcomes in the amount of 50%, the company does not want to pay more than
> 20%.  My sense is that this is all a matter of negotiation, but would like
> to know if the numbers are realistic on both sides.  Is there any guidance
> in the NSF or NIH general guidelines?  What is the experience of those who
> are involved in tech transfer programs on this question?
> ***************************************************

--
Best Regards,

Michael

Michael Odza
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