The benefits of the reciprocal grantback clause in patent licensing

Dusanee Kesavayuth

Economics of Innovation and New Technology, 2017, vol. 26, issue 5, 418-428

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.

Date: 2017
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DOI: 10.1080/10438599.2016.1210295

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