Intellectual property rights in the EU pre-commercial procurement for innovation

In 2007 the EC introduced pre-commercial procurement (PCP) to endow the EU public sector with a legal instrument for procuring innovative solutions, unavailable in the market. To induce firms to participate in a PCP, the EC suggests contracting authorities to leave the intellectual property rights (IPR) of the new solution with the firms. Based on the perspective of a possible commercial success, the IPR should work as a major incentive for companies to engage in a PCP. As important as the EC seems to consider the IPR, for a successful PCP, so far no guidelines have been provided on how to estimate their economic value. This paper proposes a methodology for such evaluation, discussing its advantages and limitations. A main message of the paper is that IPR economic value should be based on the expected profits coming from commercialisation of the would-be innovative solution. Moreover, the value should change across the different development phases of the PCP. The findings could be useful for a broad audience of PCP potential participant