IP Transactions as Facilitators of the Globalized Innovation Economy

Abstract

Intellectual property (IP) systems grant exclusive rights to individuals for their creations. Yet inventors and authors may not be able to commercialize their creations by themselves. Firms may not be in a position to commercialize every invention their employees create. And many creations arise in collaborative environments in which multiple creators work across multiple organizations. IP transactions enable the orderly transfer of rights to make commercialization possible. This Chapter considers both the fundamental issues that appear in all IP transactions as well as special issues arising in complex transactions such as joint ventures. Further, despite concerns over patent thickets and "anti-commons", IP transactions abound. Many technology firms find themselves in a web of “in-licenses” (importing IP rights from others) and “out-licenses” (exporting IP rights to others). A central theme of this Chapter is that the heart of the commercialization enterprise is the value chain - the steps required to take creative inspiration from a good idea to a finished product available in the market. As value chains have grown longer and more complex, creative IP transactional attorneys and their clients have forged new forms of IP transactions. Entrepreneurial firms have created IP exchanges and markets in which speculators or aggregators buy up IP to enforce or resell. Overall, the Chapter argues that IP and private ordering are essential to continued development of globalized value chains that deliver desirable and affordable products to consumers. Rather than being impediments to innovation as some commentators have alleged, or simply a means for incentivizing the different players to perform their roles in the value chain, IP rights are, in fact, the mechanism by which the orderly transfer of information and proprietary rights occur.

Keywords: IP, intellectual property, licensing, tech transfer, commercialization, joint ventures, strategic alliances, globalization, value chains, open innovation

JEL Classification: K11, K12, K20, O3