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Similarly, many firms view the expenses associated with inward licensing of patents not as a cost (or loss or revenue) per se, but as a means of preventing patent infringement and costly litigation.
Some firms are monitoring potential infringements of their patents in order to generate future licenses or cross-licenses. In a survey a patent licensing, for example, Japanese firms (especially large firms) reported that warnings of infringement were the most frequent stimulus to licensing, ahead even of the publication of patent documents.

Licensing can also improve the ability of small firms to participate in innovation networks and economic value chains. In many industries, small firms lack the scale, scope or market power to fully extract value from their patented inventions. While they can attempt to integrate downstream manufacturing and distribution facilities into their business to boost returns from their innovation investments, the associated costs and risk of failure are high. Alternatively, many small firms choose to co-operate with established firms to gain access to such complementary assets. In such cases, patent can be an effective mechanism for technology transfer, allowing the small firm to profit from royalty streams generated by the sales of products and services offered by other based on its inventions. Inward licensing can also enable firms to access the technology they need to complement their more limited R&D portfolios and bring new products and services to market.

IP regimes strongly influence the decisions of small firms to commercialize inventions on their own or in partnership with other, usually larger, firms. Research indicates that strong IP protection regimes are conducive to licensing between small and large firms and enable co-operation that can bring together the complementary assets of participating organizations (Gans and Sten, 2003). In weaker IP protection regimes, start-ups and other small firms may need to acquire complementary assets directly to avoid losing their comparative advantage. Research further suggests that technology-intensive small firms and start-ups can improve their negotiating position with large firms (e.g. in cross-licensing arrangements) if they have a strong patent portfolio (Grindley and Teecc, 1997).

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* 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)