LICENSING OF IPRs AND

STRATEGIC INTENT

Role of Firm, Industry and Technology Characteristics

Rakesh Basant

Rakesh Basant/IPlicense 2

Role of IPRs

IPRs creates market for licensing Information asymmetry IP boundary

Increase in licensing activity ConvergenceComplexityMunificence Costs - risk premium

Rakesh Basant/IPlicense 3

Licensing - Key Decisions

Should one license? If yes,

To whom?What should be the terms and conditions

of licensing?Should it be bundled with other

arrangements like JV, networking Should it be bundled with other IP:

Trademark-Patent linkages

Rakesh Basant/IPlicense 4

Context - Firm, Industry & Technological Characteristics

Appropriability: Nature of IPR protection Importance of complementary assets (CAs):

Specialized (critical) v/s Generic Market and technological uncertainty Importance of enabling technologiesStage of the technology/product life cycle

(TLC/PLC)Nature of competition (CAs, appropriability)Network externalities: Role of standards Implications for transaction costs

Rakesh Basant/IPlicense 5

Firm Context - Strategic Role of Licensing

Access complementary assets & marketsTime to market, investment costsAppropriability, advantage licensee/competitor

Licensing by public labs: accessing CAs? Importance of 3Ps, tacit knowledge for licenseeKnowledge for patents v/s knowledge for

manufacturing/marketing Design freedom: cross-licensing of patent

portfoliosTechnology acquisition (Tacitness, 3Ps)

Rakesh Basant/IPlicense 6

Strategic Role.....

Risk reduction vis-à-vis price, quality & supply disturbance Credible commitment, demand creation

(Brands, Patents)Litigation resolution: overlapping

IPRs/claims, cross-licensingLeveraging IPRs for other negotiations: JVs, joint

R&DCreation of standards: Demand creation thru

complementary productsStrategic deterrence: Influence competitors R&D

portfolio

Rakesh Basant/IPlicense 7

Strategic Role…..

Earning revenue from strategic misfits: product v/s patent portfolios

Expanding the scope of IP: licensing trademark across products (Dilution?)

Exploiting learning opportunities: licensing -- integration (JV?)Specialized CAs, complexity, munificenceSector specific learning curves (chemical process?)Learning from the licensees ( TLC/PLC, contingency

clause)

Rakesh Basant/IPlicense 8

Insights into Terms of Licensing

Short terms v/s long term TLC, uncertainty

Unilateral v/s cross-licensing Munificence, complexity, TLC/PLC

Fixed fee v/s royalty Uncertainty: slide-up scale, low fixed fee?

Royalty rates TLC, uncertainty

Rakesh Basant/IPlicense 9

Insights into Terms...

Sharing of improvements by licensors and licensees Munificence, complexity, TLC/PLC, grant-back

Exclusivity: product/market/time TLC/PLC, uncertainty, munificence

Sublicensing TLC/PLC, uncertainty, munificence

Technical assistance Complexity, tacitness, 3 Ps

Rakesh Basant/IPlicense 10

Thank You