Licensing Contracts Research Articles

Foreign Eco-Technology Licensing Strategy and the Coordination of Import Tariff and Emission Tax Policies

This study investigates eco-technology licensing strategy by a foreign firm that offers two-part tariff licensing contracts (i.e. combination of a per unit royalty and a lump-sum fee) to a domestic polluting firm under the strategic import tariff in the presence of an exogeneous emission tax. We particularly consider the possibility of negative royalty (or subsidised royalty per unit production) by the foreign licensor and compare the two different licensing cases with and without non-negative royalty. We find that given a lower level of emission tax, the licensor may choose negative royalty only when the import tariff is high. We also find that the optimal import tariff with non-restrictive licensing contract with a negative royalty is higher than that with restrictive one, but allowing a negative royalty is better for domestic welfare unless the emission tax is so high (or environmental damage is serious). Finally, we show find that the optimal import tariff under the two-part tariff licensing might have a negative relationship with an emissions tax.

Mixed competition and technology licensing in a supply chain.

Technology licensing as a vital part of business behavior in many industries has drawn a fair amount of attention in industrial organization literature. Most existing literature on licensing decisions assumes that all firms engage in Cournot or Bertrand competition, while the type of mixed competition may affect the choice of the licensor. In this context, what decision will the licensor make faced with different mixed competitions? This paper studies the optimal technology licensing contract of a licensor firm engaging in different mixed competitions (Cournot-Bertrand or Bertrand-Cournot) with a potential licensee in a differentiated duopoly market considering one upstream firm (supplier) that provides key inputs. We find that if either the royalty or fixed-fee licensing is applied, the licensor favors royalty licensing under Bertrand-Cournot competition when the degree of substitution is small and prefers the fixed-fee licensing no matter under what kind of mixed competition as the degree of substitution increases. In the case of fixed-fee licensing, the result shows that the profits of licensors are the same under different types of mixed competition. Besides, fixed-fee licensing is not always the optimal choice for consumers, and they would prefer royalty licensing when the degree of substitution is very small.

Patented product remanufacturing and technology licensing in a closed-loop supply chain

In practice, the OEM may license technology to a remanufacturer to help the remanufacturer carry out remanufacturing activities while charging patent licensing fees. This kind of cooperative behavior has a significant impact on the environmental and economic benefits brought by remanufacturing activities. However, the patent licensing behavior will also improve the quality of remanufactured product produced by remanufacturer, and increase their competition with OEM’s products. So, how do consumers' quality preferences for products affect OEMs' patent licensing decisions? What kind of patent license contract can bring more profits to the OEM? Which patent license contract is more beneficial to environmental protection? To answer these questions, this paper examines the best production strategies and the best technology cooperation mode of the supply chain member companies, with considering the influence of consumers’ quality preferences. Via the Cournot duopoly model, three common licensing strategies are investigated and compared, and the following conclusions are drawn. (i) When the OEM does not license the patent, if the quality of the remanufactured product is relatively low compared with that of the new product, the remanufacturer will not enter the market to carry out remanufacturing activities. (ii) The OEM will benefit from the quality-improved remanufacturing patent license, and will be willing to license the patented technology to the remanufacturer only if the unit cost gap between the new and remanufactured products is not very large. The higher the quality of the remanufactured product prior to patent licensing, the lower the patent licensing fee that the OEM can charge, and the lower the profit that the OEM can obtain through the patent licensing. (iii) Two-part tariff licensing is always the best patent licensing strategy for the OEM, regardless of the quality level of the remanufactured product prior to patent licensing. This study elucidates the optimal patent licensing strategy options for the OEM and provides some theoretical contributions and practical implications.

Optimal technology licensing contract with quality improvement innovation under Cournot competition

This paper analyzes the optimal licensing contract for the patentor with a quality improvement innovation in a Cournot duopoly market. We examine and compare three licensing contracts (fixed-fee licensing, royalty licensing, and two-part ad valorem licensing) in terms of the patent-holding firm’s profit, consumer surplus, and social welfare. We also study the impact of quality differences on the choice of licensing contract. One might expect that consumer surplus and social welfare are greater under fixed-fee licensing. However, we show that this conclusion seems to be untrue under quality improvement technology licensing. Moreover, we find that (1) there exists a threshold for the degree of quality difference above which fixed-fee licensing will be listed for the consideration of the patent-holding firm and below which it will be abandoned; (2) royalty licensing and two-part ad valorem licensing are always profitable for the patent-holding firm and two-part ad valorem licensing brings the patentee the most profit.

Global drug diffusion and innovation with the medicines patent pool

This paper studies the impact of the first joint licensing platform for patented drugs, the Medicines Patent Pool, on global drug diffusion and innovation. The pool allows generic firms worldwide to license drug bundles cheaply and conveniently for sales in a set of developing countries. I construct a novel dataset from licensing contracts, public procurement, clinical trials, and drug approvals. Using difference-in-differences methods, I find that the pool leads to substantial increases in the generic supply of drugs purchased, particularly in countries with stronger patent protection. In addition, there are some positive increases in clinical trials and drug product approvals after a compound enters the pool, mostly by firms outside the pool.

University–Industry Technology Transfer: Empirical Findings from Chinese Industrial Firms

The knowledge and innovation generated by researchers at universities is transferred to industries through patent licensing, leading to the commercialization of academic output. In order to investigate the development of Chinese university–industry technology transfer and whether this kind of collaboration may affect a firm’s innovation output, we collected approximately 6400 license contracts made between more than 4000 Chinese firms and 300 Chinese universities for the period between 2009 and 2014. This is the first study on Chinese university–industry knowledge transfer using a bipartite social network analysis (SNA) method, which emphasizes centrality estimates. We are able to investigate empirically how patent license transfer behavior may affect each firm’s innovative output by allocating a centrality score to each firm in the university–firm technology transfer network. We elucidate the academic–industry knowledge by visualizing flow patterns for different regions with the SNA tool, Gephi. We find that innovation capabilities, R&D resources, and technology transfer performance all vary across China, and that patent licensing networks present clear small-world phenomena. We also highlight the Bipartite Graph Reinforcement Model (BGRM) and BiRank centrality in the bipartite network. Our empirical results reveal that firms with high BGRM and BiRank centrality scores, long history, and fewer employees have greater innovative output.

The market value of rhetorical signals in technology licensing contracts

Automated text and content analysis in business-to-business (B2B) settings – such as technology licensing – can offer rich insights for both scholars and practitioners. Drawing on conceptualizations of rhetorical signals and the principles on cooperative communication, this study uses technology licensing contracts to investigate how contractual terms and formulations lead to investor reactions (i.e., licensee's market value). Using automated text analysis, we demonstrate how monitoring and enforcement emphasis can be usefully retrieved from contractual text. Substantially we show that greater monitoring (enforcement) emphasis increases (decreases) the licensees' market value. Greater concreteness reverses these effects of greater monitoring (enforcement) emphasis on the licensee's market value. Combined, the three-way effect of monitoring emphasis, enforcement emphasis, and concreteness generates the greatest increase in the licensee's market value. These insights provide guidance for licensees on how best to formulate their licensing contracts. We show how to conduct automated text analyses to advance research in the area.

Issues of legal regulation of collective management of copyrights and related rights in Ukraine

The article analyzes the problematic issues of legal regulation of collective management of copyrights and related rights, which exist under the 2018 Law of Ukraine “On effective management of property rights of copyright holders in the scope of copyright and (or) related rights”. It is noted that the adoption of this Law was an important stage in the development of Ukrainian legislation in the scope of copyright and related rights in the direction of its approximation to the standards of the European Union on the activities of collective management organizations. This has significantly implemented the main provisions of the Directive of the European Parliament and of the Council № 2014/26/EU into the national legislation of Ukraine. At the same time, the analysis conducted in the article allows us to state that the Law also contains some controversial provisions that require theoretical understanding and development of proposals for further improvement of legal regulation of collective management of copyright and related rights. It is proposed to replace the title of this Law with a more precise and concise one – “On the collective management of copyright and (or) related rights”. It is emphasized that this Law should consistently take the position that the object of collective management is property copyright and related rights. In order to
 implement the provisions of Directive № 2014/26/EC, a position was expressed on the expediency of enshrining in national legislation the possibility of right holders to transfer their copyright and related rights to management not only to collective management organizations but also to other independent organizations. Attention is paid to the expediency of returning to the representative model of relations between collective management organizations and rightsholders. It is noted that in the text of the Law the term “contract on permission to use copyright and (or) related rights” should be replaced by “license contract”, specifying that collective management organizations can only grant non-exclusive licenses.

Peculiarities of establishing the customs value of goods containing intellectual property objects

Significant changes in the protection of goods containing intellectual property objects are considered in terms of payment of royalties in cross-border trade. The analysis of a transportation procedure of goods includes the peculiarities of their customs value establishing. The upward tendency for registered trademarks is observed both in Russia and in the world, independently of one another. Risks of violating intellectual property rights and risks related to the non-inclusion of royalties in the customs value of goods transported are analyzed. As a result, the inclusion of royalties in the customs value of goods is defined as the most significant requirement for a safe supply chain of goods under study. The study covers the important problems of establishing the customs value in the logistics flows of goods containing intellectual property objects, and the solutions to the stated problems. This article examines the peculiarities of including royalties in the customs value in the supply chains. Equivalent interpretation of the terms of payment inclusion in the world practice is established. The analysis results of judicial practice are grounds for proposals to update the existing regulatory documents that reveal the meaning and content of the license agreement as to goods imported into Russia within the EAEU and containing objects of intellectual property. Organizational proposals on the interaction between customs authorities and participants in global trade, on the interaction of federal executive bodies in terms of the correct interpretation of customs legislation, as well as in terms of the possible access to available information on license contracts are developed

Did Ben and Jerry’s Violate United States Antiboycott Laws in Choosing not to Renew Its Licensing Contract with Its Israeli Lessee?

Did Ben and Jerry’s Violate United States Antiboycott Laws in Choosing not to Renew Its Licensing Contract with Its Israeli Lessee?

О государственной регистрации договора и последствия договора

The article is dedicated to the wide circle of questions, connected with the state registration procedure foreseen for a number of contracts by the law. The registration objects’ pluralism and registrating bodies’ diversity are pointed to. The rule of p. 3 art. 433 Civil Code of the Russian Federation, a plenty of changes in the civil legislation in the connection with the registrating procedure in a contracts are comprehended. Particular attention is made to the consequences of registrating demand’s infringement for different registrating objects (obligatory and disposal contracts, contract’s consequences). Regulations of contemporary law, various it’s changings during the last years, existing mistakes and demerits are under analyzing. Author’s point of view to the comprehension and using the rule of p. 3 art. 433 CC RF and some other rules is formulated. A number of conclusions (for example, about the separate effect of the p. 3 art. 433 CC RF’s rule for contract’s participants and for third persons, about the fiction of contract’s registration for it’s participants) is made and argued. Made conclusions are scrutinizing on the examples of various contracts, in which the registrating procedure is used. They are obligatory contracts (selling immovable property and business, leasing immovable property, building, construction, business) and disposal ones (mortgage, cession, novation of a debt, transference an immovable property object in the confidential managing property contract, giving a right in the commercial concession and licence contracts). Besides the Civil Code’s regulations special legislation touching upon questions of rights and bargains’ registration is used.

Tariff-Induced Licensing Contracts, Consumers’ Surplus and Welfare Revisited

Tariff-Induced Licensing Contracts, Consumers’ Surplus and Welfare Revisited

Does the politics matter? Legal and political economy analysis of contracting decisions in Ghana’s upstream oil and gas industry

Abstract Ghana is often cited as one of Africa’s most stable democracies. Since 2004, the country has awarded 18 petroleum agreements to various international oil companies (IOCs) and their local partners to explore for hydrocarbons in its offshore basins. In 2010, Ghana became an oil-producing country following earlier commercial discoveries in 2007. Nevertheless, the likelihood of the Ghanaian State getting its fair share of petrodollar revenues primarily depends on its ability to negotiate good petroleum contracts and effectively regulate the industry. This article examines the legal and political economy factors that influence contract outcomes in Ghana’s oil and gas industry. It sheds light on how the inner workings of the political economy, especially in a competitive clientelist setup involving intense electoral competition between two dominant parties in an emerging oil-producing country, influence contractual outcomes—an area less explored in the literature. We find that the country's emerging oil and gas industry has become deeply intertwined with the pervasive, entrenched and clientelist multi-party politics of the day. As such, entrenched rentier social groups—business and political elites—have sometimes sabotaged institutional reform to create conditions that favour rent capture. This is evident, for example, in the award of oil and gas licensing and other supply chain contracts. Ghana’s post-1992 ‘winner takes all’ political mindset and the perceived big financial bonanzas the oil industry offers, resulted in suspicions of impropriety regarding the award of some oil acreages. We argue that if the laws were allowed to work, as they should in practice, Ghana’s oil and gas industry would be better regulated, and better outcomes would arise from the contracting process. Discretionary power should be limited as much as possible and, where granted, subject to a high level of scrutiny.

A game-theoretic approach for examining government support strategies and licensing contracts in an electricity supply chain with technology spillover: A case study of Iran

Technology spillover is evident in the renewable energy sector due to the significant development of technology. However, the lack of proper laws and regulations is an obstacle for technology-leader renewable energy suppliers to promote technological innovation. Therefore, some suppliers are interested in free-riding behavior instead of investing in their technologies. Consequently, we investigate the role of government support strategies and licensing contracts in promoting technological innovations under market failure by applying a game-theoretic approach. We consider government supports under two strategies: fixed-in-tariff (FIT) and grid's subsidy (GS); and cooperation between the rival renewable energy suppliers under two licensing contracts: royalty licensing (RL) and joint venture (JV). The two competitor renewable energy suppliers, the grid company, and the government are considered as players. One of these suppliers is a technology leader, and the other is a technology follower. The decision variables are the wholesale electricity price, level of electricity reliability, the quantity of electricity, and the subsidy amount. Based on the results of the case study, the government strategies provide more development of technology than the cooperation strategy between the two suppliers. The lowest and the highest pricing of electricity occur in the GS and RL scenarios, respectively.

Do licensors learn from out-licensing? Empirical evidence from the pharmaceutical industry

This paper starts by observing that many licensing contracts contain explicit organizational arrangements for transferring the licensed technology, involving repeated and close interaction between the licensing partners. We argue that these interactions provide opportunities for the licensor to learn from the licensee. Using data on 1861 licensing deals of 254 pharmaceutical and biotech firms between 1995 and 2015, we show that licensors are more likely to cite the inventions from their licensing partner after an out-licensing deal than matched control firm-pairs that do not engage in licensing. The paper makes the following contributions: first, it demonstrates that not only licensees but also licensors can learn from licensing and that this reverse learning stems from the licensor-licensee relation. Second, it shows that firms can learn from directed outward knowledge transfers rather than non-deliberate knowledge spill-outs. Third, we show that the licensor's post-licensing behavior vis-à-vis the licensee reflects targeted learning by tapping into the most valuable components of the licensee's technology portfolio and those new to the licensor. Finally, the paper extends the theoretical framework behind strategic out-licensing decisions. We show that learning from out-licensing is an additional (positive) element in the trade-off faced by licensors in addition to short-term revenue generation and the risk of long-term rent dissipation.

Exclusive licensing of university technology: The effects of university prestige, technology transfer offices, and academy-industry collaboration

Exclusivity is a key concern when designing a licensing contract, yet the organizational factors that influence the exclusive provision of university licenses remain underexplored. This study provides a deeper understanding of this question by developing a balanced framework that considers both licensors (universities) and licensees (companies) in licensing deals. Furthermore, we posit that university prestige affects both a university's ability to conduct non-exclusive licensing and a firm's incentive to obtain an exclusive license, thereby shaping their joint willingness to license (non-)exclusively. We also examine how technology transfer office (TTO) experience and prior collaboration between a university and a firm moderate this relationship. To test the hypotheses, we use a dataset consisting of 6653 licensed patents owned by 117 representative Chinese universities. We find that an inverted U-shaped relationship exists between university prestige and the likelihood that two parties choose exclusive licensing. Moreover, the moderating effect of TTO experience is partially supported while that of prior collaboration is fully supported. Our findings generate important implications for the relative social impacts of exclusive and non-exclusive licensing of technology inventions as well as the management of university licensing.

Interpreting digital licensing contracts between a metaphorical and functional direction: A comparative analytical study

This study seeks to clarify the importance of explaining the type of digital license contracts to see if it can continue subjecting them to the metaphorical direction that adopts the direction of applying the traditional rules to this types of contract or must it be subject to the functional direction that adopts the necessity of establishing independent legal rules in the theory of contracts in Egypt. The problem of the user not reading the contract terms is still there. Although consumers do not read the terms of digital licensing contracts, some jurisprudence in the US often insist that it must be the exchange of consent must take place that the offeree must see the terms and conditions before assenting in some sort of this contracts, this differs from the nature of digital licensing contracts and the way they are contracted. It is right that the consumers discover in some the types of contracts do not express the consent by the traditional way in the contract but are subject to specific instructions set by the site, due to the inability to read and understand the terms of the contract, but rather that in some types of digital licensing contracts the consumers are not aware to be a party to a contract according to the traditional concept of contract theory. Legal recognition is important by the Egyptian and Arab legislations in the role of technical and digital in regulations next to the contract and the law (functional direction) which can contribute to help the user to read the terms of use, we must make use of digital technology to fulfill the function of the contract, which aims to create obligations on both parties, businesses and the user. The following questions were analyzed: Is it possible an individual can enter into a contract without realizing it on the internet? Is the individual obligated to contractual terms that he did not read and understand? How can the provisions of the traditional contract be applied to digital licensing contracts? Then I concluded the necessity of enacting new legal rules that regulate digital licensing contracts within Egyptian legislation.

LICENSING BY OUTSIDE INNOVATOR IN HOTELLING MODEL REVISITED

This paper extends Banerjee and Poddar [Banerjee, S and S Poddar (2019). ‘To sell or not to sell’: Licensing versus selling by an outside innovator. Economic Modelling, 76, 293–304] by lifting the cap on per unit royalty rates in the cases of royalty licensing and two-part tariff licensing. We reconsider the optimal technology licensing contract by an outside innovator facing two heterogeneous licensees in a standard Hotelling framework. Our findings show that the optimal licensing policy could be fixed fee to the efficient firm, or two-part tariff to both firms (pure royalty to both firms), or two-part tariff to the efficient firm, depending upon the cost differentials between the firms and the size of innovation.

Dual-sourcing and technology cooperation strategies for developing competitive supplier in complex product systems

This study aims to identify the strategies for developing competitive suppliers for a weak main manufacturer in a complex product systems (CoPS) supply chain. Several crucial characteristics in the competition of CoPS are considered when stakeholders exhibit differential ability. Dual-sourcing and a jointed strategy have been proposed to facilitate supplier development and technology cooperation. Multi-stage games are developed to explore the optimal strategies based on a benchmark model. The optimal decisions and a computational analysis are presented to examine the effect of supplier development. The results show that dual-sourcing and technology licensing contracts have a significant effect on improving indigenous technology capability in the short term. However, a dual-sourcing strategy with a jointed contract is the most efficient supplier development strategy and technology cooperation in the long term. The powerful or the collaborative supplier would be a first-tier supplier for the weak main manufacturer, depending on different parameters such as the technology transfer ability of the collaborative supplier and contract items. Overall, the impact of key parameters on the optimal strategies are considerably different.

Value from technology licensing – The role of monitoring and licensing experience

Technology licensing is an important form of exchange in business-to-business markets. Licensees consider licensing technologies as a key mechanism to expand their technological asset base and to innovate. Even though exchange is the central focus of marketing academia, technology licensing contracts as a form of exchange have been largely overlooked. We take some steps to fill this void by studying the role of governance in licensing contracts. We rely on governance and specifically agency theory to study two-sided moral hazard problems in technology licensing. The two-sided nature of the problem is reflected in the presence of both upstream monitoring (i.e., the licensee monitoring the licensor) and downstream monitoring (i.e., the licensee being monitored by the licensor). We demonstrate that the effects of monitoring on licensee value creation are conditional on the licensee’s experience in licensing. Specifically, we observe that, conditional on the licensee having accumulated a high level of licensing experience, upstream process monitoring and downstream output monitoring increase licensee market value while downstream process monitoring reduces licensee market value. Interestingly, we find no support for similar moderating effects of partner-specific experience. We rely on a unique database of original licensing contracts, historical data on past licensing contracts, and stock price data to analyze the value created by individual licensing contracts. The combined results may help licensees draft more valuable contracts.