To understand why some patents get licensed and others do not, we estimate a portfolio of firm- and patent-level determinants for why a particular licensor’s patent was licensed over all technologically similar patents held by other licensors. Using data for licensed biopharmaceutical patents, we build a set of alternate patents that could have been licensed-in using topic modeling techniques. This provides a more sophisticated way of controlling for patent characteristics and analyzing the attractiveness of a licensor and the characteristics of the patent itself. We find that patents owned by licensors with technological prestige, experience at licensing, and combined technological depth and breadth have a greater chance at being chosen by licensees. This suggests that a licensor’s standing and organizational learning rather than the quality of its patent alone influence the success of outward licensing.

1. Why do some patents get
licensed while others do not?
In the journal:
Industry and Corporate Change
Download the article here

2. “Beyond the technological motivation to license-in a patent and the
quality of the patent, there are firm-level qualities that can distinguish a
licensor from others and these can influence the likelihood that a
particular patent will be licensed” (Ruckman and McCarthy 2017)

3. The Authors
Karen Ruckman
Beedie School of Business,
Simon Fraser University
Ian P. McCarthy
Beedie School of Business,
Simon Fraser University

4. K Ruckman and I McCarthy.
Why do some patents get licensed while others do not?
Industrial and Corporate Change
Download the article here
The research paper

5. An activity where the owner of a
patent (the licensor) allows another
party (the licensee) the rights to use,
adapt and commercialize that patent
in exchange for compensation.
What is technology licensing?

6. Open innovation and the rise of
licensing
In 2014 it is estimated that annual global revenues for
technology licensing exceed $200 billion

7. The focus of our study
Despite the considerable market
for patented technologies, many
patents remain unlicensed.
We seek to understand why
some patents get licensed, while
others do not.

8. We know that patent characteristics
are linked to licensing likelihood.
The complexity, breadth and perceived
importance of a patent make it more
attractive to licensees and increase its
chances of being licensed.

9. We know much less about how the
characteristics of the licensor impact
the likelihood a patent will be licensed
We address this gap.
It’s important that companies
know which characteristics to
capitalise on so as to be better at
licensing out.

10. Patent Characteristics
Patent complexity (+)
Patent age (+)
Patent scope (+)
Patent citations (+)
Licensor Characteristics
Licensor size (+/-)
Licensor experience (+)
Licensor research intensity (+)
Licensor research age (+)
Past relationships between a
licensor and licensee (+)
The likelihood a
patent will be
licensed.
What we looked at.

11. Our approach
We identified a set of biopharmaceutical
patents that were licensed.
For each of these licensed patents we
identified a set of alternate patents that could
have been licensed but were not.
To do this, we used topic modeling to analyse
each licensed patent and then identify
remarkably similar patents that were not
licensed

12. What we found.

13. LICENSOR CHARACTERISTICS THAT IMPACT THE
LIKELIHOOD A PATENT WILL BE LICENSED
HOW THE LICENSOR CHARACTERISTIC
IMPACTS THE LIKELIHOOD A PATENT
WILL BE LICENSED
Licensor prestige: The extent to which a licensor is
viewed favorably by licensees.
Measured as a licensor's average number of non-self
forward citations on patent stock within the previous five
years.
Prestigious licensors have a greater chance of
licensing-out as licensees are more likely to
know about and be attracted to them due to
the increases in licensor standing, visibility,
credibility, and the benefits by association
Licensor experience at licensing: The extent to which a
licensor is practiced at licensing.
Measured as the number of licensing agreements a
licensor has been involved in the previous five years.
Experienced licensors learn from prior licensing
activity which makes them more proficient at
licensing-out and in turn increasing the
likelihood their patents will be licensed.
Licensor technological depth: The extent to which a
licensor specializes in a particular technological area.
Measured as the number of patents granted to a licensor
in the same patent class as the licensed patent in the
previous five years.
Individually technological depth and breadth
have no impact on licensing likelihood.
However, licensors strong in both
technological depth and breadth have greater
learning and innovation capabilities and these
also combine to increase a licensor’s ability to
license-out.
Licensor technological breadth: The technological scope
of a licensor’s past patenting efforts.
Measured as the number of different patent classes the
licensor has patented in the previous five years.

14. The takeaways
1. The halo effect.
Licensees are not just making licensing
decisions based on quality of the
patented technology, but also on the
reputation of and technological fit with
the licensor.
Prestige makes a licensor more visible to
licensees. It is also makes licensors more
legitimate and attractive to licensees.

15. The takeaways
2. Experience matters.
Experience allows licensors to
accumulate the specific knowledge,
people, and routines required to find
and do deals with licensees
Experience increases a licensor's ability
to be known to and selected by
potential licensees.

16. The takeaways
3. Organizational learning
enhances licensing likelihood.
A licensor’s technological depth
and breadth balance the
knowledge processes for
technology transfer transactions.
Depth and breadth combined,
signal to prospective licensees that
a licensor possesses the efficient
ability to convey and transmit
technical ideas.

17. Dr. Ian
McCarthy
@toffeemen68
Professor, Technology and
Operations Management
Beedie School of Business
Simon Fraser University
Ian McCarthy
It Depends Blog
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