The impact of the timing of patent allowance on technology licensing performance: evidence from university invention commercialization

Abstract

This paper investigates the impact of the timing of patent rights on licensing performance in the context of university technology licensing. We provide an argument that the timing of patent allowance, i.e., a legal event that clarifies patent rights, in the technology licensing phase can alter licensing performance by shifting technology valuation, as well as behavioral dynamics, in the process of commercialization. By analyzing inventions disclosed from Stanford University, we find that preallowance licensing (i.e., entering a licensing arrangement prior to patent allowance), compared to postallowance licensing, is negatively associated with licensing performance by increasing the chances of licensing underperformance. However, licensing underperformance associated with preallowance licensing is only significant when the inventor and licensee do not have prior collaboration experience. This study emphasizes the importance of understanding the temporal condition of appropriability in the route for technology commercialization by revealing the patent‐licensing timing sequence as a source of variation in university technology licensing.