25th aug, 2009

Study shows licensing of patents have little effect on revenue

I have found a vastly interesting paper made for OECD called “Who Licenses out Patents and Why?” 

Zuniga and Guellec have studied patent licensing in Europe and Japan and have come up with some very interesting facts. 

 

First there is quite a big difference between how many companies license their patents out. 59% in Japan but only 35% in Europe. However if corrected for out-licensing to non affiliated companies the percentage drops to 27% and 20%. The large companies license more of their patents out, which the report explains by the fact that large companies are involved in many areas and think more strategically. 

 

A surprising fact is that the country in Europe where there is the largest degree of licensing to non-affiliated companies is …Denmark. The reason must be found in the fact that there are many smaller companies in Denmark who supports the products of others instead of offering their own? 

 

The report also asked to the effect of licensing deals. More than half of the companies have not experienced any increase in revenue due to licensing. This must be distressing for the companies because the number one reason for licensing is to increase earnings. The second most popular reason is to cross license, ie. Get access to other technologies. 

 

The report shows that if a company out-licenses its patents it’s licensing a large share of its patents and is more likely to out-license other IP (Trademarks and copyright). 

 

The main barriers to licensing are finding partners, lack of experience and disagreement of licensing terms. The last is understandable since most companies does not work structured with valuation of IP. Compared with what patents are used for this is even more odd since most companies use their patents for gaining capital through investments.

I found the report via IPEG 

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