The Validity of Grant-Back Clauses in Patent Licensing Agreements

Schmalbeck, Richard L.

doi:10.2307/1599139

Cited by 6 publications

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“…The licensor cannot judge what might happen but will hedge against the worst possible outcome, which might result in it being overtaken by the licensee. As we pointed out earlier, the inclusion of a grant-back clause provides the licensor with a safeguard by ensuring it access to the results of developments undertaken by the licensee before the latter can exploit them in the market (Schmalbeck, 1975).…”

Section: Licensors and Uncertain Technologymentioning

confidence: 99%

Explaining the Use of the Grant-Back Clause in Technology Licensing

Laursen

Leone

Moreira

et al. 2013

AMPROC

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Licensing is one of the most commonly observed inter-firm contractual agreements. Drawing on the resource-based view of the firm and contract economics, we argue that the inclusion of a grant-back clause in licensing agreements emerges as a consequence of the licensor and licensee firms' requirements to balance the need to protect their technological resources with the need to learn through internal and external processes. We argue that licensing agreements are increasingly likely to contain a grant-back clause (i) the closer the licensed technology is to the core of the licensor's patent portfolio, and (ii) the higher the uncertainty of the licensed technology. In contrast, we conjecture decreasing likelihood of a grant-back clause, the closer the licensed technology is to the core of the licensee's patent portfolio. Technological uncertainty is conjectured to positively moderate the results both when the licensed technology is part of the core technology of the licensee and the licensor. We test our hypotheses using a sample of 404 licensed technologies over the period 1984-2004. We employ a hierarchical nested decision model to account for the inclusion of a grant-back clause in a licensing contract nested in the decision about which technologies to license out. We find broad support for our theoretical arguments.

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Section: Licensors and Uncertain Technologymentioning

confidence: 99%

Explaining the Use of the Grant-Back Clause in Technology Licensing

Laursen

Leone

Moreira

et al. 2013

AMPROC

View full text Add to dashboard Cite

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Grantbacks, territorial restraints, and innovation

Ambashi

Régibeau

Rockett

2019

International Journal of Industrial Organization

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We analyse the effect of grantback clauses in licensing contracts. While competition authorities fear that grantback clauses might decrease the licensee's ex post incentives to innovate, a standard defence is that grantback clauses are required for the patent-owner to agree to license its technology in the first place. We examine the validity of this "but for" defence and the equilibrium effect of grantback clauses on the innovation incentives of the licensee for both non-severable and severable innovations, which roughly correspond to infringing and non-infringing innovations. We show that grantback clauses do not increase the patent-holder's incentives to license when non-severable innovations are at stake but they do when severable innovations are concerned -suggesting that the "but for" defence might be valid for severable innovations but not for non-severable ones, in direct contradiction to regulation in some jurisdictions. Moreover we show that, for severable innovations, grantback clauses can increase the range of parameters for which follow-on innovation by the licensee occurs. Our work extends the large literature on sequential innovation to an environment where information diffuses through licensing rather than through the mere act of patenting. In this different informational set up we show that Green and Scotchmer (1995)'s conclusion that the initial innovator should have a patent of infinite breadth no longer holds.

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Development, Allocation and Management of IP

2022

Intellectual Property Licensing and Transactions

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contents 9.1 Licensee Developments: Derivatives, Improvements and Grantbacks 248 9.2 Licensor Developments: Commissioned Works 254 9.3 Joint Developments: Foreground and Background IP 262 9.4 IP in Joint Ventures 265 9.5 IP Maintenance and Prosecution 275In previous chapters we have largely focused on the licensing of existing intellectual property (IP) by a licensor to a licensee. But in many cases significant bodies of IP may be created by the parties during the term of the agreement. This IP may be created by a licensor who contracts to undertake technology development services for its licensee, or by a licensee that is given the right to make its own modifications and improvements to the licensed IP. Or, in some cases, IP may be developed jointly by the parties. In each of these cases, the parties must agree which of them will own the newly developed IP, and whether any licenses will be granted to the non-owning party, and how they will manage and prosecute that IP. licensee developments: derivatives, improvements and grantbacksWhen a licensor provides IP to a licensee, the licensee is sometimes permitted to develop its own IP based on the licensed IP. This section discusses some of the legal issues surrounding those licensee-developed works, and how they are handled in IP licensing agreements. Derivative Works and ImprovementsSection 101 of the Copyright Act defines a "derivative work" as a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a "derivative work".Under Section 106 of the Copyright Act, the owner of a copyright has the exclusive right to prepare derivative works based upon a copyrighted work. Derivative works that are made without the licensor's authorization have no copyright protection at all. Thus, if a licensee wishes 9

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The Validity of Grant-Back Clauses in Patent Licensing Agreements

Cited by 6 publications

References 0 publications

Explaining the Use of the Grant-Back Clause in Technology Licensing

Explaining the Use of the Grant-Back Clause in Technology Licensing

Grantbacks, territorial restraints, and innovation

Development, Allocation and Management of IP

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