Licensing Strategies of the New “Intellectual Property Vendors”

This article explores the licensing strategies pursued by firms whose business model is based on developing and licensing out their intellectual property. These "intellectual property (IP) vendors" are not traditional suppliers, since they do not engage in production or commercialization, but specialize solely in the generation of IP. Considerable anecdotal evidence exists about these creative and enterprising firms. However, there has been no systematic investigation of how they use licensing to capture value from their IP. Our research indicates that their licensing strategies can be differentiated along two main dimensions. The first concerns the nature of the contractual relationship: whether the license stands alone or whether it is part of a larger package including other R&D collaborative agreements. The second concerns whether the technologies concerned are of high or low cumulativeness. These dimensions yield a typology outlining four different strategies IP vendors can use.

[1]  F. Malerba,et al.  Technological Regimes and Schumpeterian Patterns of Innovation , 2000 .

[2]  O. Williamson Comparative Economic Organization: The Analysis of Discrete Structural Alternatives , 1994 .

[3]  Jay Pil Choi,et al.  Technology Transfer with Moral Hazard , 1996 .

[4]  Ulrich Lichtenthaler,et al.  The Drivers of Technology Licensing: An Industry Comparison , 2007 .

[5]  S. Scotchmer,et al.  Standing on the Shoulders of Giants: Cumulative Research and the Patent Law , 1991 .

[6]  J. Gans,et al.  The Product Market and the Market for 'Ideas': Commercialization Strategies for Technology Entrepreneurs , 2002 .

[7]  M. Dowling,et al.  Licensing as a commercialisation strategy for new technology-based firms , 2004 .

[8]  D. Teece Managing Intellectual Capital , 2002 .

[9]  W. F. Heinze Dead patents walking , 2002 .

[10]  Dov Dvir,et al.  Plans are nothing, changing plans is everything: the impact of changes on project success , 2004 .

[11]  Wesley M. Cohen,et al.  R&D spillovers, patents and the incentives to innovate in Japan and the United States , 2002 .

[12]  K. Arrow Economic Welfare and the Allocation of Resources for Invention , 1962 .

[13]  D. Teece Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy , 1993 .

[14]  Jeffrey H. Dyer,et al.  The Relational View: Cooperative Strategy and Sources of Interorganizational Competitive Advantage , 1998 .

[15]  R. Merges,et al.  Specialized supply firms, property rights and firm boundaries , 2004 .

[16]  J. Bessant,et al.  Finding, Forming, and Performing: Creating Networks for Discontinuous Innovation , 2007 .

[17]  David Kline,et al.  Rembrandts in the Attic: Unlocking the Hidden Value of Patents , 1999 .

[18]  Bernard Guilhon,et al.  Markets for technology and firms' strategies: the case of the semiconductor industry , 2004, Int. J. Technol. Manag..

[19]  Richard R. Nelson,et al.  On limiting or encouraging rivalry in technical progress: The effect of patent scope decisions , 1994 .

[20]  Inés Macho-Stadler,et al.  The Role of Information in Licensing Contract Design , 1996 .

[21]  Daniel A. Levinthal,et al.  Innovation and Learning: The Two Faces of R&D , 1989 .

[22]  Lee N. Davis,et al.  Intellectual property rights, strategy and policy , 2004 .

[23]  E. Hippel Sticky Information and the Locus of Problem Solving: Implications for Innovation , 1994 .

[24]  R. Coase The Market for Goods and the Market for Ideas , 2008 .

[25]  R. Caves,et al.  THE IMPERFECT MARKET FOR TECHNOLOGY LICENSES , 2009 .

[26]  Kirk Monteverde,et al.  Appropriable Rents and Quasi-Vertical Integration , 1982, The Journal of Law and Economics.

[27]  A. Arora,et al.  Licensing the market for technology , 2003 .

[28]  Youngjune Kim The Impact of Firm and Industry Characteristics on Technology Licensing , 2005 .

[29]  Franco Malerba,et al.  Innovation and market structure in the dynamics of the pharmaceutical industry and biotechnology: towards a history‐friendly model , 2002 .

[30]  A. Arora Licensing Tacit Knowledge: Intellectual Property Rights And The Market For Know-How , 1995 .

[31]  B. Klein,et al.  Vertical Integration, Appropriable Rents, and the Competitive Contracting Process , 1978, The Journal of Law and Economics.

[32]  K. Kultti,et al.  Hold-ups and Asymmetric Information in a Technology Transfer: the Micronas Case , 2002 .

[33]  James Bessen Holdup and Licensing of Cumulative Innovations with Private Information , 2004 .

[34]  O. Granstrand,et al.  Multi-Technology Corporations: Why They Have “Distributed” Rather Than “Distinctive Core” Competencies , 1997 .

[35]  P. Ring,et al.  Structuring cooperative relationships between organizations , 1992 .

[36]  O. Granstrand The Economics and Management of Intellectual Property , 1999 .

[37]  Kwaku Atuahene-Gima,et al.  Inward Technology Licensing as an Alternative to Internal R&D in New Product Development: A Conceptual Framework , 1992 .

[38]  Keith E. Maskus,et al.  Reforming U.S. Patent Policy: Getting the Incentives Right , 2006, Innovations: Technology, Governance, Globalization.

[39]  Alfonso Gambardella,et al.  Science and innovation: Science and innovation in pharmaceutical research , 1995 .

[40]  Richard R. Nelson,et al.  On the Sources and Significance of Interindustry Differences in Technological Opportunities , 1995 .

[41]  D. Teece,et al.  Managing Intellectual Capital: Licensing and Cross-Licensing in Semiconductors and Electronics , 1997 .

[42]  J. Tamada,et al.  Keeping watch on glucose , 2002 .

[43]  D. Teece Capturing Value from Knowledge Assets: The New Economy, Markets for Know-How, and Intangible Assets , 1998 .

[44]  H. Varian,et al.  The Art of Standards Wars , 1999 .

[45]  D. Mowery,et al.  Inside the black box: The influence of market demand upon innovation: a critical review of some recent empirical studies , 1993 .

[46]  B. Larson,et al.  Technology Transfer, Licensing Contracts, and Incentives for Further Innovation , 1994 .

[47]  A. Arora,et al.  Markets for Technology and Their Implications for Corporate Strategy , 2000 .

[48]  Alfred Benjamin Garrett,et al.  The Flash of Genius , 2012 .

[49]  Lee N. Davis,et al.  The ‘Mad Max Puzzle’: Positioning and the Lone Inventor , 2008 .

[50]  J. Hagedoorn Sharing intellectual property rights - an exploratory study of joint patenting amongst companies. , 2003 .

[51]  Lee N. Davis,et al.  R&D Investments, Information and Strategy , 1999, Technol. Anal. Strateg. Manag..

[52]  J. Goodnow International Technology Licensing: Compensation, Costs and Negotiation , 1982 .

[53]  G. Pisano The R&D Boundaries of the Firm: An Empirical Analysis , 1990 .

[54]  Jens Frøslev Christensen,et al.  The industrial dynamics of Open Innovation—Evidence from the transformation of consumer electronics , 2005 .

[55]  Andrew B. Hargadon Firms as Knowledge Brokers: Lessons in Pursuing Continuous Innovation , 1998 .

[56]  Toru Yoshikawa,et al.  Technology development and acquisition strategy , 2003, Int. J. Technol. Manag..

[57]  Stephen Guth,et al.  Beware Patent Trolls , 2005 .

[58]  D. Leonard-Barton CORE CAPABILITIES AND CORE RIGIDITIES: A PARADOX IN MANAGING NEW PRODUCT DEVELOPMENT , 1992 .