Monetization of Intellectual Property: An Open Innovation Perspective

Abstract

Monetization of intellectual property (IP) presents a challenge to firms in a market economy because innovation is expensive to produce and inexpensive to copy. Still, individual firms, in search of supernormal profits, continue to invest in innovation and employ a variety of means to monetize IP. This chapter discusses several forms of monetization—including sale of products, licensing and sale of technologies, and securitization—and suggests the importance of complementary marketing assets for monetization. Finally, this chapter discusses monetization of IP in the context of the emerging open innovation paradigm—in contrast to the vertical integration (VI) model of innovation—with reference to open-source and proprietary software and concludes that there is a trend toward coexistence and convergence between the two.