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Inter-temporal Tie-ins: A Case for Tying Intellectual Property Through Licensing

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  • Stephen Law

Abstract

Hybrid licences tie trade secret rights (which have no fixed expiration) to related patent rights (which expire). Although level royalty hybrid licences, which charge a single royalty for both rights, have been prohibited, it can be shown that infinite-term licensing (ITL) for patent rights may be better than a limited-term patent, when returns to the licensor are fixed. This article explains hybrid licensing as a means of privately implementing the efficient ITL outcome when returns to the licensor are constrained but not necessarily fixed, without requiring a change in the length of the patent term.

Suggested Citation

  • Stephen Law, 2004. "Inter-temporal Tie-ins: A Case for Tying Intellectual Property Through Licensing," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 11(1), pages 3-26.
    • Handle: RePEc:taf:ijecbs:v:11:y:2004:i:1:p:3-26
    DOI: 10.1080/1357151032000172200
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    References listed on IDEAS

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    1. Sen, Debapriya & Tauman, Yair, 2007. "General licensing schemes for a cost-reducing innovation," Games and Economic Behavior, Elsevier, vol. 59(1), pages 163-186, April.
    2. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, April.
    3. Erutku, C. & Richelle, Y., 2000. "Optimal Licensing Contracts and the Value of a Patent," Cahiers de recherche 2000-07, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    4. Macho-Stadler, Ines & Martinez-Giralt, Xavier & David Perez-Castrillo, J., 1996. "The role of information in licensing contract design," Research Policy, Elsevier, vol. 25(1), pages 43-57, January.
    5. ERUTKU, C. & RICHELLE, Yves, 2000. "Optimal Licensing Contracts and the Value of a Patent," Cahiers de recherche 2000-07, Universite de Montreal, Departement de sciences economiques.
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    Cited by:

    1. Don Drummond & Annette Ryan & Michael R. Veall, 2013. "Improving Canada's Productivity Performance: The Potential Contribution of Firm-level Productivity Research," International Productivity Monitor, Centre for the Study of Living Standards, vol. 26, pages 86-93, Fall.
    2. Ottoz Elisabetta & Cugno Franco, 2009. "Hybrid Licensing of Product Innovations," Review of Law & Economics, De Gruyter, vol. 5(1), pages 579-594, October.

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    More about this item

    Keywords

    Licensing; Hybrid Licensing; Intellectual Property Rights; Patents; Trade Secrets; Tying; K11; K21; L42;
    All these keywords.

    JEL classification:

    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts

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