Facilitating Conditions of Technological Collaboration: Evidence from University Invention Licensing

Abstract

This paper examines the implications of uncertain patent rights for postlicensing performance in the context of the technology licensing of university inventions. University-generated inventions are usually early stage technologies, often at the proof-of-concept or prototype stage, which then require a substantial amount of time and effort from both the inventor and the licensee to be developed into a commercially viable product. Effective collaboration between the inventor and licensee in this context is critical due to the high level of technological and market uncertainty as well as the relatively long time span required for commercialization. We suggest that clarifying the patent rights prior to the signing of a licensing agreement can lessen expropriation concerns on the inventor side and thus motivate the inventor to fully engage in the postlicensing collaboration process, eventually leading to higher licensing performance. We also suggest that this positive effect of clarified patent rights on licensing performance can be substituted with repeated collaboration experience between the inventor and licensee. By analyzing 718 inventions that have been licensed from Stanford University for commercial development, we provide empirical tests about whether patent rights clarification in the licensing agreement phase is positively associated with eventual licensing performance. Our findings show that licensing agreements made after patent rights clarification yield higher collaboration outcomes than agreements made before such clarification. However, this positive effect of patent rights clarification on collaborative outcome is only significant when the inventor and licensee have no prior collaboration experience. This study contributes to the research on innovation management in technology licensing by confirming that uncertainty regarding patent rights can provide an important source of variation in subsequent patent-based collaboration and thus illuminating a specific appropriability condition under which postlicensing collaboration is likely to be encouraged.