Survey on Patent licensing - George Washington University

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5 Δεκ 2012 (πριν από 4 χρόνια και 8 μήνες)

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Dominique Guellec

Pluvia Zuniga


Organisation for Economic Co
-
operation and
Development

Directorate for Science, Technology and Industry



The Center for International Science and Technology Policy

and the School of Public Policy, GMU

TECHNOLOGY, SCIENCE, AND INNOVATION POLICY RESEARCH SERIES

Washington, D. C., 2 April 2009

WHO LICENSES OUT AND WHY?


LESSONS FROM A BUSINESS SURVEY

BACKGROUND



A patent license is a contract by which the patent
holder authorises another party to use its invention
under certain conditions (notably financial).


Patent licensing plays a central role in technology
markets=> the pillar for knowledge exchange as
patents can work as “credible hostages” when non
-
protected, complementary know
-
how and services are
provided


Anecdotal evidence => Growing licensing activity in
the past two decades








Worldwide (cross
-
border) royalty and license
receipts

(Billion USD; source: World Bank)



0
20
40
60
80
100
120
1970
1975
1980
1985
1990
1995
2000
2005
DRIVING FORCES


Broad changes in the modes of innovation, globalisation
and strengthened market competition (OECD 2006a).


A new organisation of industrial research=>networks and
markets, and relying more on new entrants and
technology
-
based firms.


Financial, regulatory (e.g. strengthening of intellectual
property rights world wide) and organisational changes
have boosted the development of markets for technology
that are often mediated by the exchange or sale of licenses
for patented technologies.

EFFECTS OF PATENT LICENSING


From a social welfare perspective, licensing has many
potentially positive effects=> increases the diffusion of
technology (at a larger scale that if the patentee did it alone,
countries, industries), facilitates vertical specialisation and the
division of tasks between companies and prevents R&D
duplication in the economy.




It can boost downstream competition by reducing barriers to
entry related to R&D. Returns from licensing can be in turn
invested on further innovation by licensors.




Yet patent licensing can also have negative effects as it may be
used as a collusion device between companies, hence reducing
competition and in some cases, innovation.

WHAT DO WE WANT TO KNOW?


Technology transactions have probably a sizeable impact on
innovation and the economy => of interest to government to
understand and measure.


Currently, little is known on licensing transactions
from a
quantitative perspective

:
their volume, the profile of companies
involved, the motives for the firms involved and the difficulties
they meet with.


Who is licensing patents? How much important are innovation
motivations compared to revenue and production related
motivations?


From the supply side, what the reasons of failure to license patents ?


How much important is patent licensing for young and small
companies?



Businesses and governments need to have a clear picture of the
situation and identify possible gaps that would deserve action




THE OECD
-
EPO
-
TOKYO SURVEY


For that purpose the OECD, with the European Patent Office and the
University of Tokyo (with support of JPO), has taken the initiative of
conducting a business survey on the economic uses of patents,
focusing in particular on the licensing
-
out.


The aim is to investigate the use of patents for licensing:


intensity and types of licensing (intra
-
group vs. non
-
affiliated
companies; cross
-
border; cross
-
licensing)



its development over recent years, its motivations and articulation
with other commercialisation practices of companies,


Obstacles and willingness to license (unsuccessful licensing)


And new practices: use of patent pools, clearing houses, auctions
and the use of patents for raising capital

SURVEY DESIGN AND IMPLEMENTATION:


EUROPE AND JAPAN


In the case of
Europe
, the questionnaire on licenses and other uses of
patents was added to the
Annual EPO Applicant Panel Survey, and
only
to EPO member countries.


List of patentees in 2006 fiscal year


A combined sample : biggest (more than two filings), smallest applicants (at most two
filings) and a random sample (run from May to mid
-
September 2007).


The response rate was 42.9%, and the resulting sample is 612 respondents (of which
476 being private companies).


In
Japan
, the survey was carried out by the University of Tokyo, in
agreement with JPO (who provided the list of patentees)


Survey targeted specifically Japanese applicants to the JPO having at least two filings
in the 2006 fiscal year.


The response rate was 33.7%; 1,640 valid responses were obtained out of 4,873 valid
targets


WHY LICENSING OUT?


Leverage economic value from intellectual assets



Make value from un
-
used inventions, or expand the range
of uses (markets) of a particular invention



Establish technology as a de facto standard



“fabless” firms, specialised in R&D (biotech,
semiconductors, chemicals etc.)



Entering into cross
-
licensing deals



Choosing competitors, deterring new entrants from
competing in R&D





WHY LICENSING IN?


Access technology invented in other companies/
universities, hence saving on research cost:



Shorter product life
-
cycles, more complex technologies
and products, no one company can generate all the
technology.



Offshoring, globalisation of value chains (separating
R&D from manufacturing).






The firm distribution of the EPO and Japanese surveys


European companies

Japanese


companies

1
-
9 employees

70

14.71

8

0.49

10
-
49 employees

66

13.87

36

2.19

50
-
249 employees

95

19.96

207

12.58

250
-
999 employees

80

16.81

409

24.86

1000
-
9

999 employees

100

21.01

264

16.05

10000 or more employees

65

13.66

31

1.88

Missing employee
information


690

41.95

Total of companies

476

100%

1645

100%

LICENSING
-
OUT OF PATENTS


0
10
20
30
40
50
60
70
80
90
100
1-9 emp*
10-49 emp
50 -249 emp
250-999 emp
1000-9999
emp
10000-or
more
European companies
Japanese companies
Licensing of patents: companies declaring licensing of patents

(% in total responding
companies)

35 % of European companies holding patents are active in
licensing out (59% of Japanese companies).


LICENSING TO NON AFFILIATED COMPANIES

0
10
20
30
40
50
60
70
80
1 -9
employees
10-49
employees
50 -249
employees
250-999
employees
1000-9999
employees
10000-or
more emp
European companies
Japanese companies
Licensing of patents to non
-
affiliated companies

(% companies declaring licensing of patents in total responding companies)




20 % of European companies (holding patents) license patents
to non
-
affiliated firms (27% of Japanese companies).


U
-
shaped relationship between size and rate of licensing
companies

WHO LICENSES OUT THE MOST? (1)

High share among small firms


Lacking manufacturing or marketing capabilities (e.g.

start
-
ups).


Inventions falling outside the core competencies and markets
of the firm.



High share among the largest firms


Broader patent portfolio, greater variety of inventions.


Product integrators => more engaged into cross
-
licensing.


Large firms more likely to set up “patent thickets” in certain
fields like semi
-
conductors


Licensing of patents to non
-
affiliated companies and foundation year (European companies)

(% companies declaring licensing of patents in total companies)


<=1960

>1960 and
<=2000

>2000

All

Companies not engaged

85

78

80

80

Companies doing licensing

15

22

21

20

# companies

172

166

116

454*

Pearson design
-
based F

0.85 (n. s.)

* Companies reporting information on year of foundation. n. s. not significant.

AGE AND LICENSING

WHO LICENSES OUT THE MOST? (2)

In a multivariate simple probit regression, licensing to unaffiliated
companies is higher:


among younger companies.


U shaped effect of size


Higher propensity in chemistry (including pharmaceuticals), and
electronics;


among UK companies and, to a lesser extent, companies from
Nordic countries

THE INTENSITY OF LICENSING

TO NON AFFILIATED PARTIES


Not only the share of licensing firms is higher among larger
companies, both in Europe and Japan, but also the share of patents
which are licensed (intensity of licensing) is higher:


18% of companies with more than 250 employees licence 20% or
more of their portfolio, compared to 11% in SMEs in Europe


In Japan: 37% in larger companies against 23% in SMEs


In average, European companies license 3% of their portfolio to
unaffiliated parties whereas Japanese 5%


MOTIVATIONS FOR LICENSING OUT


Motivations for licensing out: Share of deals concluded

in the previous three years obeying the following motivations



European Companies

Japanese Companies

All

>
250
employees

<=
250
employee
s

All

>250
employee
s

<= 250
employees

Earning revenue

60

40

70

52

54

55

Entering into cross licensing

18

28

12

18

19

16

Sharing technology with other
companies (open innovation)

10

8

11

5

3

6

Establishing your technology as a
de facto standard

12

12

11

11

8

14

Outsourcing manufacturing

4

3

4

11

10

14

Stopping perceived infringement of
your patents

14

14

14

# of companies (active in licensing)

124

48

76

460

274

58

MOTIVATIONS FOR LICENSING OUT


In Europe and in Japan the first motivation, by far, is “earning
revenues”, followed by “entering into cross
-
licensing”


In Europe: Smaller firms are more motivated than large ones by
“earning revenues” while they are less motivated by cross
-
licensing.


Outsourcing manufacturing is marginal among European companies,
less so among Japanese.



Willingness to license patents

Share (%) of your patent portfolio that you would be willing to license out

but could not actually licence

(European companies)





Not licensing firms

Licensing firms

Share of patents

Sample

All

<=250
emp

>250
emp

All

<=250
emp

>250 emp

0%

76

81

83

76

55

50

64

>0%

24

19

17

24

45

50

36

Mean %

9.78

(1.29)

7.98

(1.39)

8.80

(1.87)

6.24

(1.83)

16.91
(3.1)

21.75

(4.33)

8.19

(3.07)

# companies

476

352

183

169

124

48

76

Licensing
vs.

no licensing companies:

Pearson unadjusted
c
2

28.45***

23.85***

5.76

Pearson survey
-
based F

7.65***

8.41***

1.47

***: significant at 1% level.



In Europe, 24% of firms declare that they have patents that they were willing to
license out but could not license. The figure is higher for firms which are already
licensing


In average, European companies would like to license around 10% of their patents



SMEs have more difficulties than large firms in licensing patents.





Not licensing firms

Licensing firms


Share of patents

Sample

All

<=250 emp

>250 emp

All

<=250 emp

>250 emp

0%

47

58

59

50

22

21

20

>0%

53

42

41

50

78

79

80

Mean %

2.42

(0.04)

2.08

(0.05)

2.08

(0.11)

2.18

(0.07)

3.25

(0.08)

3.36

(0.19)

3.20

(0.09)

# companies

1

537

1

091

175

400

446

58

265

Licensing
vs.

no licensing companies:

Pearson
c
2

181.03***

72.80**

33.85***

Note
: **: significant at 5 % and *** significant at 1% level.



In Japan, 53% of firms declare that they have patents that they were willing to
license out but could not license.



Again, the figure is bit higher for firms which are already licensing and SMEs have
more difficulties than large firms in licensing patents.


In average, Japanese companies would like to license around 2% of their patents


Willingness

to license patents



# companies

% of
patents
willing

# firms
licensing

%

Biotechnology

14

0,34

6

0,43

Civil Engineering; Thermodynamics

(including engines and pumps)

57

0,26

21

0,37

Computers

10

0,26

5

0,50

Electricity and Semiconductor Technology

21

0,27

7

0,33

Electronics

12

0,29

6

0,50

Handling and Processing

30

0,18

13

0,43

Human Necessities (including agriculture,


medical products, printing)

72

0,27

35

0,49

Industrial Chemistry

18

0,43

12

0,67

Polymers

13

0,34

7

0,54

Pure and Applied Organic Chemistry

(including pharmaceuticals)

22

0,36

16

0,73

Telecommunications

10

0,55

9

0,90

Vehicles and General Technology (including
transporting mechanisms, lighting)

42

0,18

24

0,57



Total (on the sample of companies declaring patenting
by technology)

337

0,27

168

0,50

Licensing and willingness to license


by technology field in the European sample

OBSTACLES TO LICENSE PATENTS


In the two areas, the main hampering factor by far is the difficulty to
find partners:

-
25% of European companies and 18% of Japanese companies considered it
as a very important factor.


Second factor in importance is the complexity and costs in drafting
and negotiating contracts.


In Europe, but not in Japan, all factors are deemed more important by
smaller companies (less than 250 employees) than by larger ones.

-

30% of smaller European companies declared the difficulty of identifying a
partner as being a very important impediment to licensing (compared to
16% in largest companies).

FINANCIAL USES OF PATENTS

European companies

Venture
capital


Private
investors

Stock
market

Securitisation

Negotiating
loans

Obtaining
public
subsidies

All

18

21

11

6

9

8

<=250 employees

22

27

11

6

10

10

>250 employees

11

10

9

6

7

4

Foundation year

<=1960

(174 companies)

7

5

8

8

7

7

>1960 and <=2000

(174 companies)

17

21

11

4

6

5

>2000

(128 companies)

31

38

13

6

14

13

No of companies responding

285

290

281

281

284

285

Financial

uses of patents (EPO survey): How important are patents for the following operations

(% of companies declaring “very important” factor for raising capital in total responding companies)


Convincing venture capitalists and private investors are the two most
important; these are more important for smaller companies than for larger ones;


The size factor seems to be less relevant than the age factor: younger
companies, founded after 2000, give far higher importance to patents for raising
funds than older ones

LESSONS AND POLICY IMPLICATIONS


Licensing out is widespread among patenting firms, both in Europe
and in Japan.



However, a significant number of transactions are missed as
declared from suppliers.



In Europe (not in Japan) SMEs have more difficulties to license out
their patents than large firms.



The major difficulties is informational (identifying partners) and
drafting & negotiating contracts


=> need specialised market intermediaries (US)? A role for government
(Japan = INPIT)?

Further work


Further research is needed to better understand the functioning of
patent licensing. E.g. linking to economic data, markets and
products.


Future work should address the factors underlying supply and
demand for patent licensing, the design of contracts (e.g. exclusivity
provisions, types of fees, etc



Implications on innovation and competition.



Comparative US analysis



Thank

you for
your

attention