Intellectual Property Licensing Research Articles

Bargaining power in the market for intellectual property: Evidence from licensing contract terms

AbstractWe study a novel database of intellectual property (IP) licensing agreements sourced from filings made by publicly listed corporations, a large fraction of which firms (initially) disclose with redacted terms. In contrast to the benchmark that IP quality alone determines the pricing of IP, we argue that bargaining power between licensing counterparties plays a critical role in explaining several patterns in observed royalty rates. Licensors with differentiated technology and high market power charge higher royalty rates, while larger‐than‐rival licensees pay lower royalty rates. Licensors command premium royalty rates for contract exclusivity, especially in competitive markets. Finally, we employ this framework and setting to understand the pricing implications of nondisclosure: licensors redact payment terms when they transact at lower royalty rates, consistent with preserving bargaining power for future negotiations. Our findings offer a new explanation for innovator secrecy and have several practical takeaways for transfer pricing and patent litigation.

Intellectual Property Licensing: A Catalyst for Innovation and New Venture Development

Intellectual Property Licensing: A Catalyst for Innovation and New Venture Development

Contours of Intellectual Property License During Insolvency

Contours of Intellectual Property License During Insolvency

Distributed 3D Printing of Spare Parts via IP Licensing

Problem definition: We consider an OEM supplying a single part to multiple buyers over an infinite horizon. We study how the OEM can digitize the spare parts supply chain by leveraging 3D printing via intellectual property (IP) licensing. Academic/practical relevance: Additive manufacturing, also known as 3D printing, has the potential to shift supply chains from global networks that rely on centralized production with traditional manufacturing technologies to mainly digital networks with distributed, local printing. Particularly well positioned to drive this transition are original equipment manufacturers (OEMs) who design and produce capital goods. Methodology: We first set up a benchmark model of the traditional physical supply chain with centralized production by the OEM. We then propose the OEM to act as an IP licensor by selling spare parts designs, rather than physical parts. With the license agreement, a buyer can print parts locally through a third-party printing service provider, enjoying a shorter lead time and lower setup cost. Given a license, each buyer chooses whether to switch to the IP licensing channel or stay in the traditional channel. The OEM selects the license terms to maximize the total profit across both channels. Results: We characterize the OEM’s optimal license and the resulting supply chain configuration. We show that 3D printing’s competency in price plays a dominant role in production decentral- ization. The conventional wisdom that 3D printing is suitable for slow moving parts holds only when it is competent along several dimensions. In a numerical experiment with realistic parameter settings, decentralized production occurs in a surprisingly large number of cases, and the proposed new business model can significantly increase the OEM’s profit. Managerial implications: Our results indicate that IP licensing by OEMs can become a major enabler in the transition to digital supply networks with distributed 3D printing, benefiting all parties involved.

Competing Responses to Global Inequalities in Access to COVID Vaccines: Vaccine Diplomacy and Vaccine Charity Versus Vaccine Liberty.

Global access to coronavirus vaccines has been extraordinarily unequal and remains an ongoing source of global health insecurities from the evolution of viral variants in the bodies of the unvaccinated. There have nevertheless been at least 3 significant alternatives developed to this disastrous bioethical failure. These alternatives are reviewed in this article in the terms of “vaccine diplomacy,” “vaccine charity,” and “vaccine liberty.” Vaccine diplomacy includes the diverse bilateral deliveries of vaccines organized by the geopolitical considerations of countries strategically seeking various kinds of global and regional advantages in international relations. Vaccine charity centrally involves the humanitarian work of the global health agencies and donor governments that have organized the COVAX program as an antidote to unequal access. Despite their many promises, however, both vaccine diplomacy and vaccine charity have failed to deliver the doses needed to overcome the global vaccination gap. Instead, they have unfortunately served to immunize the global vaccine supply system from more radical demands for a “people’s vaccine,” technological transfer, and compulsory licensing of vaccine intellectual property (IP). These more radical demands represent the third alternative to vaccine access inequalities. As a mix of nongovernmental organization-led and politician-led social justice demands, they are diverse and multifaceted, but together they have been articulated as calls for vaccine liberty. After first describing the realities of vaccine access inequalities, this article compares and contrasts the effectiveness thus far of the 3 alternatives. In doing so, it also provides a critical bioethical framework for reflecting on how the alternatives have come to compete with one another in the context of the vaccine property norms and market structures entrenched in global IP law. The uneven and limited successes of vaccine diplomacy and vaccine charity in delivering vaccines in underserved countries can be reconsidered in this way as compromised successes that not only compete with one another, but that have also worked together to undermine the promise of universal access through vaccine liberty.

Startups internationalizing in quest of a business model: The global prospecting of process niche firms

This paper examines technology startups whose initial offering is not a tangible product or service, but rather a technology used in the production process of goods and services of other firms. These “process niche firms,” as we call them, represent an emerging and increasingly common feature of the digitized economy. As part of their search for a suitable business model – be it products, services, and/or outright licensing of intellectual property – process niche firms engage in early internationalization in order to gain relevant market knowledge and identify possible business partners. A framework is derived to examine the internationalization pattern of such firms. The paper draws on four illustrative case studies providing insight into how such process niche firms “prospect” in foreign markets prior to deciding on the business model that suits them best. Early in their life cycle, process niche firms may decide to locate their headquarters in a different country in closer proximity to relevant markets and partners, as their high knowledge intensity and dearth of tangible assets makes them highly movable. Later in their development, process niche firms will likely evolve into other types of firms, depending on the business model they ultimately choose and the process that they follow.

An Overview on patenting trends and technology commercialization practices in the university Technology Transfer Offices in USA and China

The Technology Transfer Office is critical in translating university research into commercial value. This research paper analyzes the performances of university Technology Transfer Office models as well as their technology transfer mechanisms. The first step of this research project involves conducting patent information searches on databases to investigate academic patenting activities in the USA and China. Many Technology Transfer Offices, have similar intellectual property licensing practices and the involvement of industrial partners throughout the commercialization process. However, during the comparison it is found that the Technology Transfer Office working models varied in several ways. The main difference is that the pace at which patenting is accomplished in the USA and Chinese universities is far more sophisticate. Because of substantial resources and government support, Proof of Concept funding at various stages of technological maturity is steadily developing at universities in the USA and China. Furthermore, both USA and Chinese universities are very active in teaching and incentivizing their faculty and students about the importance of academic entrepreneurship and are well-versed with skilled technology transfer professionals who have all the necessary skills to transfer technology.

VALUATION OF INTELLECTUAL PROPERTY IN THE SYSTEM OF FACTORS OF INFLUENCE ON THE AMOUNT OF PROFIT OF THE ENTERPRISE

A statistical analysis of the dynamics of filing patent applications in the world, as well as issued patents according to the World Intellectual Property Organization. The indicator of the International Property Rights Index for 2020 for the intellectual property market of Ukraine is considered.
 The individual nature of intellectual property objects and the existing great disagreement between several inventors in the process of creating such objects have been established. Therefore, the protective results of human intellectual activity can not be measured by the amount spent on their creation of socially necessary labor, in contrast to the tangible assets of the enterprise. The use of traditional pricing approaches depending on the objectives of the assessment is analyzed. In general, for the purposes of commercialization and capitalization to some extent used income, market, cost approaches, so it is advisable to apply a systematic approach to valuing intellectual property for different purposes and conditions of use in business.
 The issue of forming a system of factors influencing the size of the company's profit depending on the method of using intellectual property is raised. The advantages and disadvantages of using the intellectual property belonging to the economic entity to protect the monopoly on the product or service produced by him are highlighted; not the use of proprietary intellectual property, but the focus on sales or licensing; purchase of intellectual property or obtaining an exclusive license for it; acquiring a non-exclusive intellectual property license to offer a new product or service in a competitive environment.
 The role of patents for innovative activity of the enterprise is formed. The formula for determining the value of a separate patent has been developed and calculations have been made on the example of the industrial property object "Vertical Hydraulic Machine" (patent for invention UA85101) of JSC "Ukrainian Energy Machines".

The “License as Tax” Fallacy

Intellectual property licenses are commonly portrayed as a “tax” that limits access to technology assets, which in turn stunts innovation by intermediate users and inflates prices for end-users. Renewed skepticism toward IP licensing, and associated judicial and regulatory interventions that apply per se-like liability rules under patent and antitrust law to IP licensing, overlook the fact that IP licenses typically play a “positive-sum” enabling function, rather than a “zero-sum” exclusionary function, by mitigating expropriation risks that would otherwise frustrate transactions between the holders of complementary specialized IP and non-IP assets. As illustrated by paradigm examples of licensing and other IP-dependent arrangements in content and technology markets, these transactional structures facilitate value-creating exchanges of knowledge assets, promote the division of labor among innovation and production specialists, and lower entry costs for firms that have strong innovation capacities but weak production and distribution capacities. An analytical framework that overlooks the enabling function of IP licensing is prone to recommend “false positive” policy actions that undermine the formation of markets in IP assets and, more generally, induce organizational distortions and reduce competitive intensity by disadvantaging R&D-specialist entities that rely on licensing-based monetization mechanisms while favoring integrated firms that maintain end-to-end commercialization structures.

TRIPS to Where? A Narrative Review of the Empirical Literature on Intellectual Property Licensing Models to Promote Global Diffusion of Essential Medicines.

Governed through the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) since 1995, the current medical R&D system requires significant trade-offs between innovation and high monopoly prices for patented drugs that restrict patient access to medicines. Since its implementation, few amendments have been made to the original TRIPS agreement to allow low- and middle-income countries (LMICs) to facilitate access by generic manufacturers through flexible provisions, such as compulsory licensing and parallel import. Although a useful policy tool in theory, the routine use of TRIPS flexibilities in LMICs in the procurement of new essential medicines (EMs) is regarded as a ‘last resort’ due to strong political response in high-income countries (HICs) and new trade agreements’ restrictions. In this context, access-oriented biomedical Public-Private Partnerships (PPPs) have emerged. More recently, leading multilateral health organizations have recommended different types of intellectual property (IP) interventions, voluntary biomedical patent pools, as strategies to reduce prices and increase the diffusion of novel EMs in LMICs. Nevertheless, the recent Ebola and COVID-19 outbreaks highlight growing concerns regarding the use of TRIPS flexibilities and the limited success of voluntary mechanisms in promoting access to medicines in the Global South amidst health crises. This review aims at describing the state-of-the-art empirical research on IP-related options and voluntary mechanisms applied by emerging PPPs to guarantee timely and affordable access to EM in LMICs and reflect on both models as access paradigms. Some suggestions are put forward for future research paths on the basis of these analyses and in response to contemporary debates on waiving key IP rights on COVID-19 therapies, diagnostics, and vaccines.

The economic and public health impact of intellectual property licensing of medicines for low-income and middle-income countries: a modelling study

BackgroundNon-exclusive voluntary licensing that is access-oriented has been suggested as an option to increase access to medicines to address the COVID-19 pandemic. To date, there has been little research on the effect of licensing, mainly focused on economic and supply chain considerations, and not on the benefits in terms of health outcomes. We aimed to study the economic and health effect of voluntary licensing for medicines for HIV and hepatitis C virus (HCV) in low-income and middle-income countries (LMICs).MethodsA robust modelling framework was created to examine the difference between scenarios, with (factual) and without (counterfactual) a Medicines Patent Pool (MPP) licence for two medicines, dolutegravir and daclatasvir. Data were obtained from MPP licensees, as well as a large number of external sources. The primary outcomes were the cost savings and health impact between scenarios with and without MPP licences across all LMICs. Through its licences, MPP had access to the volumes and prices of licensed generic products sold in all covered countries on a quarterly basis. These data informed the volumes, prices, and uptake for the past factual scenarios and were the basis for modelling the future factual scenarios. These scenarios were then compared with a set of counterfactual scenarios in the absence of the studied licences.FindingsCumulatively, between 2017 and 2032, the model's central assumptions predicted an additional uptake of 15·494 (range 14·406–15·494) million patient-years of dolutegravir-based HIV treatments, 151 839 (34 575–312 973) deaths averted, and US$3·074 (1·837–5·617) billion saved through the MPP licence compared with the counterfactual scenario. For daclatasvir-based HCV treatments, the cumulative effect from 2015 to 2026 was predicted to be an additional uptake of 428 244 (127 584–636 270) patients treated with daclatasvir, 4070 (225–6323) deaths averted, and $107·593 (30·377–121·284) million saved with the licence compared with the counterfactual scenario.InterpretationThe chain of effects linking upstream licensing to downstream outcomes can be modelled. Accordingly, credible quantitative estimates of economic and health effects arising from access-oriented voluntary licensing were obtained based on assumptions that early generic competition leads to price reductions that influence procurement decisions and enable the faster and broader uptake of recommended medicines, with beneficial economic and health effects.FundingUnitaid.

Corporate Innovation and the Auditor's Assessment of Going Concern

SYNOPSIS In this study, we examine whether external auditors assess corporate innovation activities when considering a financially distressed client's ability to continue as a going concern. Using patent count, patent market value, and patent citation to measure the firm-level innovation output, we document that higher quantity and quality of innovation activities are associated with a lower likelihood of going concern opinions. The association between innovation and going concern opinions is more pronounced for audit offices with high exposure to corporate innovation and clients operating in R&D-intensive industries. In additional analyses, we confirm that innovation is associated with future business value, as measured by future profitability and intellectual property licensing agreements. We conclude that corporate innovation represents a mitigating factor when auditors consider whether a going concern opinion is appropriate for a financially distressed client. Data Availability: All data are available from public databases identified in the paper. JEL Classifications: M41; M42; O32.

Why are some Massive Open Online Courses more open than others?

This paper studies the determinants of the intellectual property license of the Massive Open Online Courses provided on a French platform. While they can opt for a traditional license, the majority of courses chooses among Creative Commons licenses. Considering the ordering in terms of degree of openness of the licenses, we study the course-, teacher- and institution-related factors driving the intellectual property decision of this pedagogical innovation. We observe that the field of study and the characteristics of the institution providing the course play a role. We explain these results by the heterogeneity in preferences and peer recognition with regard to open practices. We also find support for the idea that course providers willing to raise indirectly revenues by selling goods complementary to the MOOC (like a certificate of completion) are less likely to choose an open license.

Blockchain, Smart Contracts and Intellectual Property. Using distributed ledger technology to protect, license and enforce intellectual property rights

For several years, almost everyone has been talking about blockchain. The underlying distributed ledger technology has become (in)famous as the technology behind cryptocurrencies such as Bitcoin and Ether. But what about blockchain and intellectual property like patents and copyright? Could this technology be used for the protection and enforcement of such rights? Which role can smart contracts play in this regard? This article focuses on questions concerning the requirements for provingthe protection of technical inventions as well as on the administration and exploitation of intellectual property rights. The latter could play an important rolefor intellectual property, which has not been registered or is not subject to registration, such as copyright. For trade secrets, a blockchain could be a useful tool for providing appropriate confidentiality measures. Last but not least, smart contracts in particular could be involved in connection with the transfer and, even more importantly, the licensing of intellectual property and mainly of software.

Chapter 20 – Technical Standards: Fair, Reasonable and Non-Discriminatory (FRAND) Licensing

This chapter in the forthcoming case book Intellectual Property Licensing and Transactions covers licensing transactions involving standards-essential patents (SEPs), including recent legal developments regarding the disclosure (and concealment) of SEPs, fair, reasonable and nondiscriminatory (FRAND) royalty rates, non-discriminatory licensing, the availability of injunctive relief for FRAND-encumbered patents, and transfers of FRAND commitments, as well as specific SDO policy clauses and license text addressing each of these issues. [Note: updated to address Ninth Circuit decision in FTC v. Qualcomm, 8/11/20]

Life sciences intellectual property licensing at the Massachusetts Institute of Technology.

Academic institutions play a central role in the biotech industry through technology licensing and the creation of startups, but few data are available on their performance and the magnitude of their impact. Here we present a systematic study of technology licensing by one such institution, the Massachusetts Institute of Technology (MIT). Using data on the 76 therapeutics-focused life sciences companies formed through MIT's Technology Licensing Office from 1983 to 2017, we construct several measures of impact, including MIT patents cited in the Orange Book, capital raised, outcomes from mergers and acquisitions, patents granted to MIT intellectual property licensees, drug candidates discovered and US drug approvals-a key benchmark of innovation in the biopharmaceutical industry. As of December 2017, Orange Book listings for four approved small-molecule drugs cite MIT patents, but another 31 FDA-approved drugs (excluding candidates acquired after phase 3) had some involvement of MIT licensees. Fifty-five percent of the latter were either a new molecular entity or a new biological entity, and 55% were granted priority review, an indication that they address an unmet medical need. The methodology described here may be a useful framework for other academic institutions to track outcomes of intellectual property in the therapeutics domain.

Transnational Intellectual Property Governance on the Internet

This article documents and classifies instances of transnational intellectual property (IP) enforcement and licensing on the Internet with a particular focus on the territorial reach of the respective regimes. Regarding IP enforcement, I show that the bulk of transnational or even global measures is adopted in the context of “voluntary” self-regulation by various intermediaries, namely domain name registrars, access and host providers, search engines, and advertising and payment services. Global IP licensing is, in contrast, less prevalent than one might expect. It is practically limited to freely accessible Open Content, whereas markets for fee-based services remain territorially fragmented. Overall, three layers of IP governance on the Internet can be distinguished. Based on global licenses, Open Content is freely accessible everywhere. Plain IP infringements are equally combatted on a worldwide scale. Territorial fragmentation persists, instead, in the market segment of fee-based services and in hard cases of conflicts of IP laws/rights. All three universal norms (global accessibility, global illegality, global fragmentation) are supported by a quite solid, “rough” global consensus.

Treatment of Intellectual Property License in Insolvency: Analysing Indian law in comparison with the U.S. and U K

A bankrupt debtor’s ability to escape unprofitable contracts, enshrined in Section 365 of the American Bankruptcy Code, is considered central to a successful reorganisation within Chapter 11. The ambit of this power and the consequence of its application has been the subject of unceasing legal and business controversy. Intellectual property licenses assumed the forefront of this controversy in 1985 when the Court of Appeals for the Fourth Circuit held that Section 365 includes a unilateral power to rescind an Intellectual Property License. Congress reacted to the Court’s decision by amending Section 365 and legislating specific protections for Intellectual Property Licensees. This paper explores the American jurisprudence on the treatment of intellectual property licenses during bankruptcy and examines them within the insolvency regimes of the United Kingdom and India. The study reveals an important legal deficiency: neither jurisdiction incorporates any explicit protections for Intellectual Property Licenses during bankruptcy. Further, we find no substantive provisions that deal with the treatment of ongoing contracts during Corporate Insolvency Resolution Proceedings in India and Administration in the UK. For India, this raises an important issue relating to the desirability of a resolution professional’s ability to interfere with pre-petition IP licensing agreements. The authors underline the importance of such interference and suggest amendments to the Indian insolvency regime to deal with intellectual property licenses during bankruptcy.

Intellectual Property Licenses in Cross Border Insolvency: Lessons from In Re Qimonda

Introduced in 2016, the Insolvency and Bankruptcy Code overhauled the Indian insolvency regime. Five years young, the work in progress Code is now in the process of adopting the Cross-Border insolvency, which was omitted from its original mandate. In 2018, a legislatively appointed committee suggested that the Code should adopt the UNCITRAL Model Law on Cross Border Insolvency. However, the Committee overlooked a crucial jurisprudential guideline, which coloured the interpretation of the Model Law, which was delivered in a cross-border insolvency dispute between American and German regimes. An American bankruptcy court subjected the German administration of American Intellectual Property assets to a protection exclusively available within the American Bankruptcy Code. This paper studies the American judicial decisions in the Samsung v. Jaffe dispute to identify and underline the importance of its directive. The study reveals that there is virtually no guidance on how an intellectual property license is treated within the Indian insolvency regime. The authors underline the importance of such guidance considering the proposed adoption of the Model Law and suggest legislative inquiry in the issue.

Utilizing and Extending Trusted Execution Environment in Heterogeneous SoCs for a Pay-Per-Device IP Licensing Scheme

A pay-per-use Intellectual Property (IP) licensing model that can protect IPs from multiple participants will benefit the FPGA IP market and Small to Medium Enterprises (SMEs). Existing protection solutions in modern FPGA devices rely on dedicated decryption engines that use cryptographic keys, which require programming them in a trusted environment. Since designs from multiple participants need protection in a typical licensing scenario, it requires a trusted third party for key programming and encryption tasks. These requirements led to the proposition of several licensing schemes; however, they do not address several security and flexibility challenges. Therefore, in this work, we propose a pay-per-device IP licensing scheme that is secure, less restrictive for the system developer and offers protection against malicious IP cores. The scheme relies on a Security Framework (SFW) that provides a Trusted Execution Environment (TEE), which handles key storage, cryptographic operations, and security monitoring. A device running the SFW can be considered a trusted platform that provides a direct secure path for the IP from its vendor to the device’s TEE, where it is decrypted, analyzed and, then configured on the programmable logic.