An Economic Perspective on Patent Licensing Structure and Provisions

Abstract

While economists have provided theoretical discussions of factors that shape the structure and provisions of technology licenses, there have been relatively few empirical studies that test these economic theories. This is likely due to the difficulty of obtaining large data sets of complete license agreements. By providing an overview of the characteristics of over 1,400 patent licenses collected from SEC filings, this paper provides empirical insights into the fundamental economic relationships that determine certain characteristics of patent licenses. This study confirms what economists have believed for some time—namely that there are differences in the structure and provisions of patent licenses across industries and across types of licensors. These findings support the view that differences in the structure and provisions of technology licenses can be attributable in part to fundamental economic differences between industries, as well as differences in the strategic incentives of parties negotiating agreements.