Cross Licensing Research Articles

Manufacturer’s patent licensing strategies based on co-opetition

In the context of co-opetition (cooperation and competition), technological innovation endows manufacturers with new competitiveness and vitality. Through patent technology licensing, manufacturers can achieve technology upgrading and efficiency improvement. To study the patent licensing decisions of manufacturers based on co-opetition, this paper constructs a production patent licensing game model that comprises two manufacturers that cooperate in the upstream component market and compete in the downstream consumer market. We conduct a comparative analysis of the game equilibrium of three patent licensing scenarioscompetition (no licensing), unilateral licensing and cross-licensingand analyse the impact mechanism of key parameters, such as market share and cost advantage (cost burden). The research results are as follows. (1) When the product substitutability (competition intensity) is not very high and the market share of manufacturer 1 is relatively small or the product substitutability (competition intensity) is large and the cost advantage of both manufacturers 1 and 2 is moderate, Pareto improvement under cross-licensing scenario is better than that under unilateral licensing and competition scenarios. (2) The Pareto improvement in the unilateral licensing scenario is always better than that in the other two scenarios. (3) When the cost advantage of manufacturer 1 is small or large, the Pareto improvement in the competition scenario is better than that in the other two licensing scenarios. The paper also analyses consumer surplus in three licensing scenarios. The conclusions can provide a decision-making basis and support for manufacturers to select appropriate licensing strategies and government participation to guide enterprise technology upgrading under different situations.

기업의 특허출원 목적에 관한 연구 : 중국기업을 대상으로

본 연구는 기업의 특허출원 목적을 파악하는데 있다. 이에 선행연구 고찰을 통해 특허출원 목적을 파악하고, 전문가 델파이를 통해 10개 요인을 선정하고 이를 중국기업의 특허담당 실무자들을 대상으로 설문조사를 실시하였다. 분석결과, Improve the technological image of your company, For use in negotiation: cross licensing, joint venture, Improve the situation in R&D cooperations, Enhance Reputation, Measure performance, Aacquire venture capital, Prevent patent infringement suits, Licensing Revenue, Blocking or prevent competitors' patenting and application activities, Prevent copying or protect own technology from imitation 순으로 중요한 것으로 나타났다. 본 연구결과는 기업에서 특허를 출원할 때 우선적으로 고려해햐 할 요인이 무엇인지 파악하고 적용하는데 있어 실무적 가이 드라인으로 활용가능할 것으로 기대한다.

A phase 1 first-in-human dose finding/randomized phase 2 study of IMM60 and pembrolizumab (PEM) in advanced melanoma and non–small cell lung cancer (NSCLC; IMP-MEL).

2582 Background: Invariant natural killer T-cells (iNKTs) share features of innate cells (NK-like) and T-cells (can prime and boost an adaptive immune response). The importance of this relatively rare lymphocyte subset has generated increased interest due to its dual ability to have a direct cytotoxic effect on CD1d expressing tumors and also its ability to induce long-lasting antitumor CD8 T cell responses mediated by cross priming and licensing of dendritic cells. Various clinical approaches involving the use of allogenic iNKT cells (both untransduced and CARs) are in development and here we describe initial clinical studies with IMM60, a synthetically derived agonist of iNKT cells which is formulated in a liposome( PORT-2). In preclinical studies, IMM-60 treatment results in maturation of DCs and B cells and a potent stimulation of iNKT cell-derived IFN-g. In efficacy studies, IMM60 demonstrated monotherapy activity in PD-1 resistant models, (eg., B16-F10), up-regulation of PD-L1 expression on cancer cells as a consequence of its priming effect, and was able to overcome resistance to PD-1 antibody therapy. Methods: IMP-MEL is an open-label first-in-man phase 1/2 study, currently enrolling adult subjects with advanced NSCLC and melanoma. IMM60 containing liposomes were administered IV Q3W at 3 escalating dose levels for 6 doses alone or with PEM 200mg Q3W. The study seeks to assess the safety and efficacy of IMM-60 alone and in combination with PEM. Results: 5 subjects have been enrolled in the monotherapy cohort having a median of 3 prior therapies (min 2, max 5). Median age was 64.5 years. No treatment related adverse events have been reported nor any objective disease responses in the evaluable monotherapy subjects (n=3) to date. Conclusions: IMM-60 is well tolerated when administered IV as monotherapy at the doses tested. The liposomal formulation leads to a favorable preliminary safety profile. Full results of the phase 1 will be reported at the meeting with analysis of circulating cytokines and flow cytometric analysis. The trial plans to transition to phase 2 testing IMM60-alone vs PEM monotherapy vs the combination of IMM60 with PEM. Clinical trial information: 80472712.

An Analysis of Remdesivir Patenting

Pharmaceutical patents are categorized into primary patents and secondary patents. Primary patents refer to compound patents, while secondary patents mainly include crystalline form patents, process patent, formulation patent and method of use patent. In the recent outbreak of COVID-19, Wuhan Institute of Virology, has applied for a new method of use patent on Remdesivir for its efficacy and safety in the treatment of the pneumonia caused by 2019-nCoV. But Gilead Sciences, the inventor of Remdesivir, is the eligible holder of the compound patent of Remdesivir. In theory, the patent applied for by Wuhan Institute of Virology has utility and novelty rather than innovativeness, for which it may not be granted the method of use patent of Remdesivir. In this case, we suggest that the patent of Remdesivir be implemented through cross licensing and compulsory licensing between different patent holders.

The Trade-off between Standards and Patents: Theory, Cases, and Solutions

본 연구는 표준과 특허의 상충관계에 대한 이론과 사례를 살펴보고, 이를 해결하기 위한 다양한 해결방안을 제시한다. 먼저 특허의 표준화에 대한 부정적 영향은 표준의 종류(공적합의표준과 ‘사실상’의 표준)와 표준화 진행단계(표준의 개발단계, 보급단계, 적용단계)에 따라서 각각 다르게 나타난다는 점에 착안하여, 표준과 특허의 상충관계를 4개의 유형으로 분류하였고, 각각의 상황에 따른 대표적 사례를 찾아 분석하였다. 특히 표준과 특허 간 상충관계는 표준특허의 경우에 극명하게 나타나는데, 특허관리기업(NPE)의 특허매입에 의한 표준특허 보유가 증가하고 있고, 이들에 의한 분쟁 건수도 증가하여 향후 이들에 의해서 표준화가 어려움을 겪을 것으로 예상하였다. 표준특허의 분쟁사례로서 삼성의 애플에 대한 특허침해 소송의 사례를 통해서는 법적인 측면은 물론 정치적 측면에서도 철저한 대응이 필요함을 알 수 있었다. 표준과 특허의 상충관계를 해결하는 방안으로서 FRAND 조건, 표준화 과정에서의 특허의 불인정, 교차라이선싱, 특허풀, 국가표준화기구에 의한 강제실시 등 여러 가지 방안들을 소개하였다. 하지만 이들이 실제로 적용되는 과정에서 명확한 개념, 조건, 기준 등에서 의견의 일치를 보이지 못하고 있어, 이견과 분쟁이 지속되고 있다. 따라서 기존의 분쟁사례들을 토대로 글로벌 차원에서의 통일된 원칙의 수립과 적용이 요구된다.The paper examines the theory and cases on the trade-off between standards and patents, and suggests the solution of the problem. We categorize the standards-patents relationships in terms of standardization process(development stage, diffusion stage, and adoption stage) and types of standards(de jure and de facto standards), and then present the typical case corresponding to the category, respectively. Especially, we focus the standard patents(often called essential patents) which are indispensible in the process of realizing a standard document technically, and therefore presents the trade- off between standards and patents clearly. Since NPEs have increased their standard patent holdings by the purchase and acted for the infringement of patents offensively, they can be an major obstacle in standardization process. From the lawsuit between Samsung Electronics and Apple as an case of standard patent dispute, we can obtain the lesson that companies should respond politically as well as legally. Finally, the various solutions to balance the trade-off between standards and patents, such as FRAND condition, cross licensing, patent pools, compulsory licensing, and open policy are suggested.

Cross‐licensing agreements in presence of technological improvements

AbstractThis study investigates the relationship between technologies that firms expect to achieve after cross‐licensing (CL) and their incentives for signing CL agreements in a multiproduct‐firm setting. Results indicate that if markets are bounded substantial technological improvements that result in removal of firms’ current products from the market may in fact reduce firms’ incentives to negotiate a CL deal. This may also give firms an incentive to agree upon a tacit collusion by which they limit the utilization of CL technologies. However, when markets are unbounded, the prospect of capturing new markets and charging royalty fees can significantly increase firms’ incentives for CL. The rationale behind our modeling assumptions is discussed using example from agriculture biotechnology industry.

Converting Royalty Payment Structures for Patent Licenses

Basic economic techniques equip a damages expert with a reliable means of converting a royalty payment with one structure to a royalty of equivalent value under a different structure. I show that one can use reliable methodologies to convert royalty payments across structures both in cases where the parties have executed a one-way license — that is, a license in which the parties determine the conditions for the licensee’s use of the patent holder’s patents — and in cases where the parties have executed a cross license, which grants each party the right to use the counterparty’s patents. When the license uses a simple royalty structure, converting the royalty payment across different structures is also relatively simple. For example, information about the patent-practicing product’s projected price might suffice to convert a per-unit royalty fee to a derived royalty rate. However, when the license in question is a cross license or complex license, converting royalty payments to a derived royalty rate might be more burdensome, as it might require the estimation of additional parameters, such as relative portfolio strength. Nevertheless, with sufficient data, existing economic methodologies offer a reliable basis for estimating and comparing the derived royalty rates of different licenses. Courts can supplement the derived royalty rate with adjustments to account for a company’s bargaining power or market risk implicit in the different royalty structures.

What Aggregate Royalty Do Manufacturers of Mobile Phones Pay to License Standard-Essential Patents?

For a decade or more, proponents of the royalty-stacking conjecture have claimed that, when an end-user product (such as the smartphone) incorporates multiple standard-essential patents (SEPs), the aggregate SEP royalty might be so high as to make it infeasible for manufacturers to make a standard-compliant product. A decade’s worth of royalty-stacking claims in the academic literature and in patent-infringement litigation begs this question: what is the aggregate royalty actually paid for SEPs used in standard-compliant products — specifically, smartphones? In 2015, Keith Mallinson, an engineering consultant in the mobile telecommunications industry, supplied an elegantly simple answer. He estimated the total monetary burden that royalties for mobile communications SEPs actually impose on manufacturers of mobile handsets and then compared that aggregate royalty to total global handset revenues for 2014. Mallinson found that the aggregate royalty for 2G, 3G, and 4G SEPs was approximately 5 percent of global handset revenues. I replicate Mallinson’s important study. I am able to confirm his results with publicly available data and my own analysis of a dataset on mobile handset sales in 2013 and 2014. In this article, I first explain Mallinson’s methodology. I then separately examine the revenues of major SEP owners, patent pools, large implementers of SEPs, and patent-assertion entities (PAEs). I show that, even using large assumed values for balancing payments in cross licenses, the aggregate SEP royalty that implementers paid in 2013 and 2014 was between 4 and 5 percent of global handset revenues for handsets practicing the 3G and 4G standards.

Inter-enterprise Collaborative Management for Patent Resources Based on Multi-agent

Based on relevant literature and theoretical consideration on management for patent resources, a theory of inter-enterprise collaborative management for patent resources (ICMPR) based on multi-agent was proposed. We put forward 4 main function modules, including collaborative recommendation, collaborative analysis, collaborative application and system server management, to support ICMPR. The ICMPR can be good to solve those tough and important problems, such as patent cross licensing among enterprises, early warning analysis of patents, collaborative technology innovation and other issues. The ICMPR can provide enterprises with practical methodology, and improve the overall competitiveness of world manufacturing industry.

Innovation and Competition Policy, Ch. 9: The Innovation Commons

This book of CASES AND MATERIALS ON INNOVATION AND COMPETITION POLICY is intended for educational use. The book is free for all to use subject to an open source license agreement. It differs from IP/antitrust casebooks in that it considers numerous sources of competition policy in addition to antitrust, including those that emanate from the intellectual property laws themselves, and also related issues such as the relationship between market structure and innovation, the competitive consequences of regulatory rules governing technology competition such as net neutrality and interconnection, misuse, the first sale doctrine, and the Digital Millennium Copyright Act (DMCA). Chapters will be updated frequently. The author uses this casebook for a three-unit class in Innovation and Competition Policy taught at the University of Iowa College of Law and available to first year law students as an elective. This Chapter, in a revised and expanded second edition, deals with issues of IP pooling and cross licensing, blanket and package licensing, joint development ventures, standard setting, the FRAND licensing process for standards essential patents, FRAND licensing obligations, the Jan. 2013 FTC/Google settlement, and related issues relating to collaborative innovation.

Open or Closed? Technology Sharing, Supplier Investment, and Competition

Competing technologies in emerging industries create uncertainties that discourage supplier investments. Open technology can induce supplier investments, but may also lead to intensified future competition. In this paper, we study competing manufacturers’ open-technology strategies. We show that despite the risk of intensifying future competition, open technologies by competing manufacturers may constitute an equilibrium and can indeed induce supplier investments. In addition, we identify a technology-risk-pooling benefit; namely, by opening technologies, competing manufacturers can induce supplier investments in both technologies and later adopt the one preferred by the market. However, manufacturers may also exhibit the prisoner’s dilemma and close their technologies despite the risk-pooling benefit. In this case, there is potential for collaborative technology sharing through cross licensing. Finally, we show that manufacturers may sometimes close their technologies to force supplier investments.

How Scalable Private-Ordering Solutions Improve IP Law: Lessons Learned From My Founding of the License on Transfer (LOT) Network

Scalable private-ordering solutions can dramatically improve an area of law, e.g., patent law, for a subset of the impacted community. A private ordering solution (a POS) modifies the legal framework for a common interest group via a standard contract. Open Source is one example of a POS in the copyright context. This paper uses the License On Transfer (LOT) Network (the largest networked patent cross license by number of patents) as a case study of a POS. The paper starts by describing the LOT agreement and the current status of the LOT Network, the independent organization that administers the LOT agreement. The paper then provides a chronological case study of the founding of the LOT Network up to the point of achieving critical mass. Lessons learned from the author’s experiences founding the LOT Network are called out throughout the case study. Such information should be of use to those interested in using a POS to improve other areas of law for a common interest group or when it is difficult to make needed changes via legislation or case law.

Patent litigation and cross licensing with cumulative innovation

We investigate the firms’ investment decisions in the presence of litigation over infringement and cross licensing as a way to settle. The model endogenously determines not only the timing of investments but also their capacities, the degree of overlap between the initial and the subsequent innovations, and the way the competitors resolve the dispute. It shows that the firms’ R&D competition in the burgeoning market is more likely to entail a lawsuit and distinctly differentiated products, while they easily agree on cross licensing to utilize each other’s works in the slow-growing market, leaving little difference between the products. From the perspective of public policy, it is clarified that the policy on patent scope cannot yield the first-best result in terms of the speed of innovation, and the welfare analysis shows that social welfare is higher when the conflict is settled via cross licensing. However, the weak protection on patent rights, which is shown to encourage cross licensing, does not always guarantee the highest level of social welfare since it weakens the leader’s bargaining power in the negotiation, leading to fewer advanced products with higher prices.

A Study of Patent Acquisition and Resolution Strategies on Patent Disputes

As globalization is accelerating, companies are making great efforts to grow. Thus, many companies are trying to make innovations, and their interest in patent, the result of innovations, is also increasing. Thus, this study tried to examine cases that companies registered study results from innovations as patents, and activities that they are doing with obtained patents. And because when patent disputes occur, companies come to devise various measures, this study tried to examine those measures through an empirical analysis. As a result of the analysis, activities performed with obtained patents turned out to be patent barrier establishment, manufacturing, cross licensing, technology transfer, and royalties through licenses, in order. Coping measures in case of patent litigation turned out to be a counter-suit, patent invalidation suit, cross licensing, suit through solidarity with other firms, and patent right fee payment, in order.

Patent Litigation and Cross Licensing with Cumulative Innovation

We investigate the firms' investment decisions in the presence of litigation over infringement and cross licensing as a way to settle. The model endogenously determines not only the timing of investments but also their capacities, the degree of overlap between the initial and the subsequent innovations, and the way the competitors resolve the dispute. It shows that the firms' R&D competition in the burgeoning market is more likely to entail a lawsuit and distinctly differentiated products, while they easily agree on cross licensing to utilize each other's works in the slow-growing market, leaving little difference between the products. From the perspective of public policy, it is clarified that the policy on patent scope cannot yield the first-best result in terms of the speed of innovation, and the welfare analysis shows that social welfare is higher when the conflict is settled via cross licensing. However, the weak protection on patent rights, which is shown to encourage cross licensing, does not always guarantee the highest level of social welfare since it weakens the leader's bargaining power in the negotiation, leading to fewer advanced products with higher prices.

삼성과 애플 특허 분쟁 사례 분석: 분쟁 대응방안을 중심으로

In case that they do not have counterstrategies ready for patent disputes in advance, they would not be able to survive competitions or would fall behind in the market. Most of domestic companies are not equipped with appropriate counterstrategies, and there are only few studies on the countermeasures for patent disputes. Thus, this study examined counterstrategies for patent disputes drawn from cases of smartphone patent disputes and preceding researches, and conducted interviews and surveys with patent experts and company executives to grasp their opinions about the effectiveness of countermeasures for patent disputes related to the smartphone field. As for analysis tool, the Delphi method is selected that is usually used for analyzing relatively a small number of expert opinions. As a result of interviewing patent experts, effective countermeasures turned out to be cross licensing, counter-suit, and patent invalidation suit, in order, and as a result of surveys with company executives, they turned out to be patent invalidation suit, counter-suit, cross licensing, suit through solidarity, and loyalty agreement, in order. It is anticipated that the study results could be used for smartphone manufacturing companies and ICT companies to establish counterstrategies for patent disputes.

Open or Closed? Technology Strategy, Supplier Investment, and Competition

Competing technologies in emerging industries create uncertainties that can discourage supplier investments. Open technology may induce supplier investments, but may also lead to intensified future competition. In this paper, we study competing manufacturers’ open-technology strategies. We show that despite the risk of intensifying future competition, open technologies by competing manufacturers may constitute an equilibrium and can indeed induce supplier investments. In addition, we identify a technology-risk-pooling benefit, namely by opening technologies, competing manufacturers can induce supplier investments in both technologies and later adopt the one preferred by the market. However, manufacturers may also exhibit the prisoner’s dilemma and close their technologies despite the risk-pooling benefit. In this case, there is potential for collaborative technology sharing through cross licensing. Finally, we show that manufacturers may sometimes close their technologies to force supplier investments.

Building Patent Portfolios to Facilitate Cross-Licensing Agreements: Implications for Merger Efficiency Analysis

One important issue at the cross section of antitrust and patent law is the patent holdup problem, which arises when one party makes relationship-specific investments ex ante that incentivizes the other party to engage in opportunistic behavior ex post. Firms facing the potential for holdup can be expected to make investments aimed at minimizing this potential. Merger is an important, but thus far little-discussed, method by which firms can attempt to solve potential holdup problems. Merger internalizes the externalities that allow for patent holdup. By merging, two firms with relatively undeveloped patent portfolios may gain meaningfully increased bargaining power in licensing negotiations, which they may use to facilitate cross-licensing agreements — thereby decreasing transactions costs and reducing the risk of opportunistism. For purposes of antitrust analysis, courts, agencies, and economists have long recognized that significant efficiencies often derive from cross licensing, including increases in output arising from the diminished marginal costs of production. As the Google-Motorola acquisition exemplifies, merger may provide an important alternative solution to holdup problems, despite being largely overlooked in the contemporary patent holdup debate. This acquisition potentially provides Google with leverage and ownership rights to protect the entire Android ecosystem that cannot be accomplished by alternative contractual structures. Such a merger — which increases output that cannot be achieved by alternative structures — appears to satisfy the basic definition of a merger efficiency. Whether these benefits — which presumably would increase output — are cognizable efficiencies in merger analysis is thus an important question. Part I of this Article discusses the economics of patent portfolios and cross licensing, addressing both their procompetitive tendencies and their anticompetitive possibilities. Part II demonstrates that merging to build a patent portfolio, and thereby to induce cross licenses, is consistent with traditional economic rationales underlying the ownership-contract tradeoff. Part III examines the treatment of efficiencies within antitrust law, articulating and analyzing the Guidelines’ framework for evaluating proffered efficiencies. Part IV then investigates whether building patent portfolios in order to facilitate cross-licensing agreements — and accordingly to increase output — satisfies the requirements of this framework. Part V concludes.

Building Patent Portfolios to Facilitate Cross-Licensing Agreements: Implications for Merger Efficiency Analysis

The intersection of antitrust and patent law has increased in scope and importance over the past several decades. One important issue at this cross-section is the patent holdup problem, which arises when one party makes relationship-specific investments ex ante that incentivizes the other party to engage in opportunistic behavior ex post. Firms facing the potential for holdup can be expected to make investments aimed at minimizing this potential. Numerous methods of solving the holdup problem exist, including using ex ante auctions to identify and alleviate holdup problems, as well as patent reform. Merger is another important, but thus far little-discussed, method by which firms can attempt to solve potential holdup problems. Merger internalizes the externalities that allow for patent holdup. By merging, two firms with relatively undeveloped patent portfolios may gain meaningfully increased bargaining power in licensing negotiations, which they may use to facilitate cross-licensing agreements—thereby decreasing transactions costs and reducing the risk of opportunistism. For purposes of antitrust analysis, courts, agencies, and economists have long recognized that significant efficiencies often derive from cross licensing, including increases in output arising from the diminished marginal costs of production. As the Google-Motorola acquisition exemplifies, merger may provide an important alternative solution to holdup problems, despite being largely overlooked in the contemporary patent holdup debate. This acquisition potentially provides Google with leverage and ownership rights to protect the entire Android ecosystem that cannot be accomplished by alternative contractual structures. Such a merger—which increases output that cannot be achieved by alternative structures—appears to satisfy the basic definition of a merger efficiency. Whether these benefits—which presumably would increase output—are cognizable efficiencies in merger analysis is thus an important question.

An Early Response to a Recent Proposal for a Defensive Patent License (DPL)

Jennifer Urban and Jason Schultz have proposed a Defensive Patent License (the “Original DPL”). The Original DPL is essentially a standardized, networked, non-negotiated, portfolio-wide, royalty-free, patent cross license. The Original DPL takes advantage of the fact that certain companies and many individuals are primarily interested in pursuing patents for defensive purposes, e.g., to achieve freedom to operate. In this article, we focus on the perspective of a substantial portfolio company (an “SPC”) and we suggest modifications to the Original DPL that may make SPCs more willing to participate in it. After a brief summary of the Original DPL, we describe the advantages of a robust DPL if successful – i.e., if the DPL is reasonably widely adopted, at least by one industry. We then describe our suggested modifications making reference to a model Modified DPL; a primary suggested modification provides that, if a member withdraws, the withdrawing member’s license is automatically revoked, both inbound and outbound, at the end of a withdrawal notice period. We discuss potential criticisms of the Original DPL and Modified DPL and end with a brief comparison of the Modified DPL to the standardized, networked, royalty-free, patent license provided by the Open Invention Network. Appendix I provides a model Modified DPL that reflects our suggested modifications. Appendix II includes some additional/related ideas for potential further modification/supplementation of the DPL idea that are not reflected in the model Modified DPL set forth in Appendix I. For example, in modification 10 of Appendix II we note that instead of (or as a precursor to) the Modified DPL, companies could join a License On Transfer (LOT) agreement. Under the terms of the LOT agreement, every LOT User agrees that when it transfers a patent, the transferred patent automatically becomes licensed to the other LOT Users existing at the time of the transfer, except (i) a transfer that is part of a legitimate spin out or of a Change of Control to a Non-Assertion Entity or (ii) a transfer to another LOT User. The license would be subject to defensive termination. Such an agreement, i.e., a License On Transfer (LOT) agreement, would protect companies that sign the agreement from the extraction of patent rents by an entity (e.g., a non-practicing entity) to which the patent is sold. Appendix III provides a model LOT agreement.