1. 1 Tackling the role of Patents for Technology Markets Issues for Data collection and Analysis Maria Pluvia Zuniga Dominique Guellec Directorate for Science, Technology and Industry Emerging Frameworks and Strategies for Enabling and Controlling Knowledge National Academies, 21st Street and Constitution Avenue, NW, Washington, DC January 29-30, 2007

2. 2 Outline Introduction Patents and Technology Markets Patterns Policy concerns Measurement of Technology Diffusion Experience in Surveys Projects for Data Collection

3. 3 1. Introduction What is the role of patents in the functioning of new infrastructures for knowledge? –Through disclosure, patents increase knowledge diffusion –Through market transactions (licensing..), patents facilitate technology diffusion –But patents may also restrain access to technology and limit development of capabilities & innovation How to deal with patent rights to ensure access and fluidity in cyber-infrastructure? To date, more anecdotal than empirical evidence –Need to quantify & understand uses of patents and exploitation strategies

4. 4 2. Patents and Technology Markets (1) Business Tendencies: Shift to “Open Innovation” models where external links play a more prominent role both in the creation and production of technology Licensing-out to recoup the costs of innovation face to faster peace of innovation Licensing-in to leverage technological assets and complement internal capabilities Different forms of partnerships, -purely licensing, equity financing, cross-patent pooling, etc. Increasing adoption of IAM practices (Intellectual Assets Management) to increase business value

5. 5 3. Patents and Technology Markets (2) Theoretical Foundations: Patents help to : Facilitate the provision of complementary tacit knowledge (i.e. know how, technical assistance, etc.) Better allocation of resources through a more efficient division of labour amongst firms (e.g. fabless companies) Technology markets help to: Prevent R&D duplications, increase diffusion of public and private R&D outcomes

6. 6 4. Patents and Technology Markets (3) Strategic uses (submarine, sleeping patents,.): Blocking entrants/competitors; limiting technology alternatives Anti-commons tragedy: under-utilization of technology; too many owners blocking each other E-based infrastructures (eg.e-bussiness models, e-science..)? Avoiding tragedy requires overcoming transaction costs, strategic behaviours, and cognitive biases of participants Conciliate upstream creation/downstream development Patents as obstacles:

7. 7 5. Patterns Growing but under-exploitation of patenting: World-wide licensing transactions average more than USD 36 billion per year between 1990 and 1997, compared to 5.6 billion in the 1980s  100 billions USD in 2002 (Athereye & Cantwell, 2005) PATVAL-EU Survey: Less than 10% of patents are subject to licensing (out) but:  10-15% Willing to be licence: 50% potential increase in the size of the market  35% of patents are not used at all; blocking 18.7%, sleeping : 17.4% JPO Survey: 8% of JPO patents are licensed, and 7% are unsuccessfully offered to license

8. 8 6. Policy Concerns How to enhance licensing by technology producers in the interest of both buyers and sellers? How to unlock (latent) economic value of patents? How to improve access to technology? Reduce anticommons (patent thicket) and foster RND (Reasonably & Non Discriminatory Practices)

9. 9 7. Measurement of technology diffusion Key issue for Analysis and Policy Evaluation Significant advances in (International) Patent Data (e.g. PATSTAT). Allows to track: Patenting strategy (e.g. technology blocking, continuations) and trends across patent systems Knowledge Diffusion effects Limited data on technology markets. Need of uniform, consistent and relevant indicators: What are the motivations for licensing-in and out? (strategic/defensive, “constrained licensing”, technology-oriented strategies)?

10. 10 8. Experience in Surveys 1994 Carnegie Mellon Survey (Yale 2: USA) on the effectiveness of patents in protection JPO Survey (Japan): Uses of IPR and types of licensing 2005/2006 EPO Survey: Motivations for patenting and proportion of patents in each category. 2003 OECD-BIAC Survey: In and out-licensing strategies (+100 Large MNE) 2002-2003 PATVAL Survey on the Uses & Value of patents (patent/inventor basis)  Various limitations (e.g. response rates, limited geographical coverage and comparability, representativity baises, etc.)  Tangible need for international coordination

11. 11 9. Projects for Data Collection International Survey on the Economic Use and Impact of patents. Current partnership OECD-EPO, and possibly others..? To built-on previous expertise (e.g. JPO, EPO, LESI and OECD surveys) Largest geographical coverage & broader population (including large, SMEs and start-ups). Gather detailed information on companies’ strategies in using and exploiting patents. E.g. items: Purposes of using patents and their relative importance (strategic, financial, protection, etc.) Motivations/and types of licensing practices (in/out) Obstacles (e.g. infiringement, litigation, limited enforcement, etc.) as buyer or seller of technology Impact of Licensing strategies on value and diffusion