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Corporate Strategy | "Patent Licensing & its Role in Firm's Growth"

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Patent Licensing & its Role in Firm's Growth

- by Prof. (Dr.) R.P.Verma*
Dr. Arabinda Bhandari*

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Page - 5

It has also been found that increases in the strength of patent protection (e.g. increasing duration, breadth of protection and decreasing costs of application)
leads to increased patenting by both large and small firms, but only smaller firms without complementary assets tend to increase licensing. Larger firms tend to license less as patent regimes strength (Arora and Ceccagnoli, 2005).

Sectoral differences

Patent licensing practices also differ from one industry sector to another, reflecting differences in the dynamics of innovation and the role of patenting in innovation processes. Anand and Khanna (2000)12 attempt to identify differences across industries with respect to patent licensing based on information from strategic alliances database. They examine licensing contracts involving US participants between 1990 and 1993. The main findings of their study include :

  • Licensing is concentrated in selected industries.
    About 80% of licensing deals occur in three industries, 46% in the chemical industry including drugs, 22% in the electronic and electrical equipment industry including semiconductors and 12% in the industrial machinery and equipment industry including computers.

  • Prior relationship is important to engage in licensing contracts.> About 30% of licensing deals are signed between parties having a prior relationship. This tendency is observed more in computer and electronic firms than in chemicals.

  • Exclusivity and restriction clauses are more common in chemical firms.
    More than half of the deals in chemical involve some exclusivity clauses, which are less common in computers (18%) and electronics (16%). Restrictions such as field of use, geographic domain and contract length are more common in chemical (40%) than computers and electronics (30%).

  • Cross-licensing is frequently used in electronics.
    Cross-licensing is more common in electronics (20%) than other industries (10%). This arrangement is observed more for transfers of technology not yet developed than ex-post transfers. This trend is also observed in Japan, indeed the ratio of cross-licence is about 90% in electronic industry. (JPO, 2004)

  • 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)


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