How Much are Flexibility and Uncertainty Worth in Patent Licensing?

Maria Isabella Leone, Raffaele Oriani, Toke Reichstein

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

Resumé

As patent licensing has become the prime driver of technology trade, understanding the rationales behind a properly-defined payment structure of the agreements is essential. Specifically, among the other remuneration components, upfront fees are critical in license negotiations since they imply a significant initial investment by the licensee and represent a source of liquidity for the licensor. We investigate how contractual flexibility, market uncertainty and technical uncertainty shape upfront fees from the licensee’s perspective. Upfront fees are shown to be positively associated with contractual flexibility and market uncertainty, while technical uncertainty is positively associated with upfront fees only if the license warrants contractual flexibility to the licensee. Licensees therefore do not necessarily see uncertainty as a negative attribute of a patent license, but rather as a potential value, above all if in presence of contractual flexibility.
As patent licensing has become the prime driver of technology trade, understanding the rationales behind a properly-defined payment structure of the agreements is essential. Specifically, among the other remuneration components, upfront fees are critical in license negotiations since they imply a significant initial investment by the licensee and represent a source of liquidity for the licensor. We investigate how contractual flexibility, market uncertainty and technical uncertainty shape upfront fees from the licensee’s perspective. Upfront fees are shown to be positively associated with contractual flexibility and market uncertainty, while technical uncertainty is positively associated with upfront fees only if the license warrants contractual flexibility to the licensee. Licensees therefore do not necessarily see uncertainty as a negative attribute of a patent license, but rather as a potential value, above all if in presence of contractual flexibility.
SprogEngelsk
TidsskriftEconomia e Politica Industriale
Vol/bind42
Udgave nummer4
Sider371-394
ISSN0391-2078
DOI
StatusUdgivet - 2015

Emneord

  • Technology licensing
  • Upfront payments
  • Flexibility
  • Uncertainty

Citer dette

Leone, Maria Isabella ; Oriani, Raffaele ; Reichstein, Toke. / How Much are Flexibility and Uncertainty Worth in Patent Licensing?. I: Economia e Politica Industriale. 2015 ; Bind 42, Nr. 4. s. 371-394
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How Much are Flexibility and Uncertainty Worth in Patent Licensing? / Leone, Maria Isabella; Oriani, Raffaele; Reichstein, Toke.

I: Economia e Politica Industriale, Bind 42, Nr. 4, 2015, s. 371-394.

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

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