Why do some patents get licensed while others do not?In the journal:Industry and Corporate Change

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“Beyond the technological motivation to license-in a patent and the quality of the patent, there are firm-level qualities that can distinguish a licensor from others and these can influence the likelihood that a particular patent will be licensed” (Ruckman and McCarthy 2017)

The Authors

Karen RuckmanBeedie School of Business, Simon Fraser University

Ian P. McCarthyBeedie School of Business, Simon Fraser University

K Ruckman and I McCarthy.Why do some patents get licensed while others do not? Industrial and Corporate Change

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The research paper

An activity where the owner of a patent (the licensor) allows another party (the licensee) the rights to use, adapt and commercialize that patent in exchange for compensation.

What is technology licensing?

Open innovation and the rise of licensing

In 2014 it is estimated that annual global revenues for technology licensing exceed $200 billion

The focus of our studyDespite the considerable market for patented technologies, many patents remain unlicensed.

We seek to understand why some patents get licensed, while others do not.

We know that patent characteristics are linked to licensing likelihood.The complexity, breadth and perceived importance of a patent make it more attractive to licensees and increase its chances of being licensed.

We know much less about how the characteristics of the licensor impact the likelihood a patent will be licensedWe address this gap.

It’s important that companies know which characteristics to capitalise on so as to be better at licensing out.

Patent CharacteristicsPatent complexity (+)Patent age (+)Patent scope (+)Patent citations (+)

Licensor CharacteristicsLicensor size (+/-)Licensor experience (+)Licensor research intensity (+)Licensor research age (+)Past relationships between a licensor and licensee (+)

The likelihood a patent will be licensed.

What we looked at.

Our approachWe identified a set of biopharmaceutical patents that were licensed.

For each of these licensed patents we identified a set of alternate patents that could have been licensed but were not.

To do this, we used topic modeling to analyse each licensed patent and then identify remarkably similar patents that were not licensed

What we found.

LICENSOR CHARACTERISTICS THAT IMPACT THE LIKELIHOOD A PATENT WILL BE LICENSED

HOW THE LICENSOR CHARACTERISTIC IMPACTS THE LIKELIHOOD A PATENT WILL BE LICENSED

Licensor prestige: The extent to which a licensor is viewed favorably by licensees.Measured as a licensor's average number of non-self forward citations on patent stock within the previous five years.

Prestigious licensors have a greater chance of licensing-out as licensees are more likely to know about and be attracted to them due to the increases in licensor standing, visibility, credibility, and the benefits by association

Licensor experience at licensing: The extent to which a licensor is practiced at licensing.Measured as the number of licensing agreements a licensor has been involved in the previous five years.

Experienced licensors learn from prior licensing activity which makes them more proficient at licensing-out and in turn increasing the likelihood their patents will be licensed.

Licensor technological depth: The extent to which a licensor specializes in a particular technological area.Measured as the number of patents granted to a licensor in the same patent class as the licensed patent in the previous five years.

Individually technological depth and breadth have no impact on licensing likelihood.However, licensors strong in both technological depth and breadth have greater learning and innovation capabilities and these also combine to increase a licensor’s ability to license-out.

Licensor technological breadth: The technological scope of a licensor’s past patenting efforts.Measured as the number of different patent classes the licensor has patented in the previous five years.

The takeaways

1. The halo effect.

Licensees are not just making licensing decisions based on quality of the patented technology, but also on the reputation of and technological fit with the licensor.

Prestige makes a licensor more visible to licensees. It is also makes licensors more legitimate and attractive to licensees.

The takeaways

2. Experience matters.

Experience allows licensors to accumulate the specific knowledge, people, and routines required to find and do deals with licensees

Experience increases a licensor's ability to be known to and selected by potential licensees.

The takeaways3. Organizational learning enhances licensing likelihood.

A licensor’s technological depth and breadth balance the knowledge processes for technology transfer transactions.

Depth and breadth combined, signal to prospective licensees that a licensor possesses the efficient ability to convey and transmit technical ideas.

Dr. Ian McCart

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@toffeemen68

Professor, Technology and Operations Management

Beedie School of Business Simon Fraser University

Ian McCarthyIt Depends Blog

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