Previous

Page - 3

Among European firms, Thomson successfully increased its licensing revenue from EUR 278 million in 1999 to 462 million in 2003, accounting for 5.5% of 2003 total net sales. Thomson has approximately 40, 900 patents and pending applications and 750 licensing agreements relating to a diversified mix of video products and services.
Thomson's top ten licensees account for approximately 72% of its total licensing revenues (Thomson, 2004).

There are, of course limits to the ability of firms to profit from the licensing of patented inventions. Some firms are reluctant to do for fear of losing their competitive advantage. They therefore limit technology licensing to firms that operate outside their fields of business (Peters, 2005). For example Hitachi, which was one of the top licensors in Japan and was reported to have earned licensing revenues of JPY 43 billion in FY 2002, changed its licensing policy in 2003 from one of openness to third party licensing to a more closed approach that aims to preserve its competitive advantage in the marketplace through greater control of inventions (Takahashi, 2005).

This strategic change resulted, in part, from the rapid technology improvement of competitors in Korea and China. Though it is not clear this change will be widespread among firms that currently pursue an open licensing strategy, holding strong patents seems to be a key factor for success.

Indirect Benefit

It must be recognised that firms can benefit financially from their patent in indirect ways. Some firms put patents into the public world domain or offer non-exclusive, royalty-free licences in order to foster development of a particular field of business in which they expect to operate. This approach can also be used to establish an industry standard that might benefit the patent holder.8 These strategies do not bring royalty income, but result in indirect benefits such as establishing de facto standards rapidly and enhancing the reputation of the patent holder.

Next

* Contributed by: -
Prof. (Dr.) R.P.Verma,
MASD (USA), MRES (London),
Ex. H.O.D & Dean,
Faculty of Commerce,
Ranchi University, Ranchi,
Dr. Arabinda Bhandari, MBA, Ph.D.
(Strategic Management)