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The benefits of the reciprocal grantback clause in patent licensing

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  • Dusanee Kesavayuth

Abstract

This paper shows that a reciprocal grantback clause could potentially be a better licensing provision than a one-way type. There are two benefits associated with the use of a reciprocal grantback clause. First, it improves efficiency by reducing the (minimum) contract compatible royalty rate to zero. As a result, the production becomes efficient because both the licensor and the licensee produce at the same marginal cost. Second, a reciprocal grantback clause is a more effective provision than a one-way grantback clause to guarantee the transfer of superior technology, hence it promotes better technology diffusion.

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  • Dusanee Kesavayuth, 2017. "The benefits of the reciprocal grantback clause in patent licensing," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 26(5), pages 418-428, July.
    • Handle: RePEc:taf:ecinnt:v:26:y:2017:i:5:p:418-428
    DOI: 10.1080/10438599.2016.1210295
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    References listed on IDEAS

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    Cited by:

    1. Ambashi, Masahito & Régibeau, Pierre & Rockett, Katharine E., 2019. "Grantbacks, territorial restraints, and innovation," International Journal of Industrial Organization, Elsevier, vol. 67(C).

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