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

Roya Ghafele and Benjamin Gibert

MPRA Paper from University Library of Munich, Germany

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.

Keywords: Transaction cost economics; patent Licensing; patent archives; electronic trading platforms (search for similar items in EconPapers)
JEL-codes: M21 O32 O34 (search for similar items in EconPapers)
Date: 2011-12-20, Revised 2012-01-10
New Economics Papers: this item is included in nep-com, nep-ino, nep-ipr, nep-pr~ and nep-tid
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