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The Transaction Cost Benefits of Electronic Patent Licensing Platforms: A Discussion at the Example of the PatentBooks Model

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  • Ghafele, Roya
  • Gibert, Benjamin

Abstract

Current mechanisms to compensate inventors and improve legal access to their inventions remain ineffective. Manufacturers encounter significant transaction costs in the process of licensing the multitude of patent rights implicated in their products. High-technology product manufacturing requires access to a diverse pool of technologies that are owned by different organizations all over the world. The transaction costs of licensing these disparate rights are inhibiting unlicensed manufacturers in emerging economies from entering important markets and simultaneously limiting the revenue patent owners can generate from non-exclusive licenses. As communications technologies improve, innovative licensing mechanisms are emerging that can help firms avoid many of these transaction costs. Search and information costs, bargaining and decision costs, enforcement costs and adjustment costs all limit the value generated from licensing transactions. These costs are particularly severe for smaller firms that lack complementary assets to develop their products, lack experience with licensing and do not have large human and financial resources to invest in negotiation outcomes. The transaction costs of licensed manufacturing increase exponentially when having to license multiple rights among disparate rightsholders in a global market. By identifying, grouping, and valuing different rights into a single license, PatentBooks, an illustration of an electronic patent licensing platform, reduces search and information transaction costs. Firms instantaneously identify appropriate license rights from all over the globe without investing considerable resources in hundreds of discrete negotiations. Patent owners are able to generate greater non-exclusive licensing revenue from manufacturers than they could by licensing their rights in isolation. In doing so, they permit firms of all sizes and nationalities to generate more returns from technology and accelerate innovation by facilitating access to valuable inventions.

Suggested Citation

  • Ghafele, Roya & Gibert, Benjamin, 2011. "The Transaction Cost Benefits of Electronic Patent Licensing Platforms: A Discussion at the Example of the PatentBooks Model," MPRA Paper 36010, University Library of Munich, Germany, revised 10 Jan 2012.
  • Handle: RePEc:pra:mprapa:36010
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    File URL: https://mpra.ub.uni-muenchen.de/36010/1/MPRA_paper_36010.pdf
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    References listed on IDEAS

    as
    1. Gould, David M. & Gruben, William C., 1996. "The role of intellectual property rights in economic growth," Journal of Development Economics, Elsevier, vol. 48(2), pages 323-350, March.
    2. Aoki, Reiko & Schiff, Aaron, 2010. "Intellectual property clearinghouses: The effects of reduced transaction costs in licensing," Information Economics and Policy, Elsevier, vol. 22(3), pages 218-227, July.
    3. Aoki, Reiko & Nagaoka, Sadao, 2004. "The Consortium Standard and Patent Pools," Economic Review, Hitotsubashi University, vol. 55(4), pages 345-357, January.
    4. Carl Shapiro, 2001. "Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard Setting," NBER Chapters,in: Innovation Policy and the Economy, Volume 1, pages 119-150 National Bureau of Economic Research, Inc.
    5. Jay Pil Choi, 2010. "Patent Pools And Cross-Licensing In The Shadow Of Patent Litigation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(2), pages 441-460, May.
    6. Schneider, Patricia Higino, 2005. "International trade, economic growth and intellectual property rights: A panel data study of developed and developing countries," Journal of Development Economics, Elsevier, vol. 78(2), pages 529-547, December.
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    More about this item

    Keywords

    Transaction cost economics; patent Licensing; patent archives; electronic trading platforms;

    JEL classification:

    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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