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A study was conducted to examine the welfare economics of probabilistic patents that are licensed without a full determination of validity. The social value of determining patent validity before licensing to downstream technology users is also investigated. A game-theoretic model of licensing to downstream oligopolists is used.

Applications for patent licenses have substantially increased, thus backlogs and delays have resulted from the inability of patent offices to cope with the demand. An analysis of the patent filing fees and its effect on the reduction of backlogs while maintaining high quality in their examination is discussed.

Patent protection enables research and development to enhance corporate profitability.

In this paper we compare and contrast the most profitable modes of licensing a cost-reducing invention by an inventor who is an industry incumbent with one who is not. We find that an industry incumbent favors licensing by means of a royalty per unit of output to which the new technology is applied while an outsider prefers to auction off a fixed number of licences outright. Our analysis also suggests that an outside inventor finds it most profitable to target greater cost-reducing inventions to monopolistic industries while an incumbent inventor favors competitive industries.

Historically, commercial use of university research has been viewed in terms of spillovers. Recently, there has been a dramatic increase in technology transfer through licensing as universities attempt to appropriate the returns from faculty research. This change has prompted concerns regarding the source of this growth--specifically, whether it suggests a change in the nature of university research. We develop an intermediate input model to examine the extent to which the growth in licensing is due to the productivity of observable inputs or driven by a change in the propensity of faculty and administrators to engage in commercializing university research. We model licensing as a three-stage process, each involving multiple inputs. Nonparametric programming techniques are applied to survey data from 64 universities to calculate total factor productivity (TFP) growth in each stage. To examine the sources of TFP growth, the productivity analysis is augmented by survey evidence from businesses who license-in university inventions. Results suggest that increased licensing is due primarily to an increased willingness of faculty and administrators to license and increased business reliance on external R&D rather than a shift in faculty research., 1. Introduction According to the Association of University Technology Managers (AUTM) surveys, licensing activity in U.S. research universities has increased dramatically in the 1990s. For the 64 universities responding to [...]

Summary. -- This paper provides an analystical construct for examining the trade policy effects of greater intellectual property protection in technology importing countries. It is shown that two types of conflict are likely to arise between net technology importers and exporters. The first relates to the level of protection with importers preferring a low level and exporters a high one. The second conflict, hitherto unexplored, relates to the manner of protection with importers likely to prefer discriminatory regimes favoring local R&D creation, whereas exporters would prefer nondiscriminatory protection in importing countries.

This paper explores the impacts of absorptive capacity on the behavior of innovating firms competing in a dynamic patent race. We introduce spillovers and absorptive capacities in the Fudenberg, Gilbert, Stiglitz and Tirole patent race with memory. First, we show that incorporating absorptive capacity has different effects according as the firm leads or follows in the race. While the leader is getting soft, the follower revives, allowing him to possibly catch up with the leader. Second, we find that spillovers with absorptive capacities tend to increase the pace of innovation, a somewhat paradoxical outcome.

We show the effects of entry of a foreign firm on domestic welfare in the presence of licensing. If the entrant is technologically inferior to the incumbent, foreign entry increases domestic welfare for intermediate (sufficiently large) technological differences between the firms under licensing with fixed fee (output royalty). If the entrant is technologically superior to the incumbent, foreign entry increases domestic welfare for sufficiently large technological differences between the firms under both fixed-fee licensing and royalty licensing.

The analysis in this paper uncovers a heretofore unrecognized connection between the degree of competitive behavior in the product market and the preferred patent licensing mechanism. Using conjectural variations as a shorthand for several different supergame outcomes of a duopoly industry, we show that both the degree of competitive behavior and the extent of the asymmetries in the behavior of the firms in the market have a non-trivial effect on the patent licensing mechanism preferred by an external patentee. The relationship between the degree of competition in product markets and the preferred patent licensing mechanism, to the best of our knowledge, has not been addressed in the literature previously and represents a useful source of new empirical implications.

We study optimal linear licensing and its social welfare implications when the innovator (patentee) is an insider that can make capacity/output commitment so as to act as a Stackelberg leader in the output market. We show that (i) the patentee's profit-maximizing licensing contract is a royalty; (ii) the optimal royalty rate is greater than the cost reduction attained by the licensed technology and is increasing in the number of competitors; (iii) optimal licensing maximizes the likelihood of technology transfer, may reduce social welfare and always makes consumers worse off; and (iv) the innovator benefits from capacity commitment, and the more competitive the output market, the greater the gains it makes by licensing. The opposite holds for consumers.

Research is presented concerning the development of a theoretical model to investigate the influence of international technology licensing on intellectual property rights. Data from 23 countries covering 1985, 1990 and 1995 is used.