Why Do Some Patents Get Licensed While Others Do Not?

Abstract

To understand why some patents get licensed and others do not we estimate a portfolio of firm- and patent-level determinants for why a particular licensor’s patent was licensed over all technologically similar patents held by other licensors. Using data for licensed biopharmaceutical patents, we build a set of alternate patents that could have been licensed-in using topic modeling techniques. This provides a more sophisticated way of controlling for patent characteristics and analysing the attractiveness of a licensor and the characteristics of the patent itself. We find that patents owned by licensors with technological prestige, experience at licensing, and combined technological depth and breadth have a greater chance at being chosen by licensees. This suggests that a licensor’s standing and organizational learning rather than the quality of its patent alone influence the success of outward licensing.

Keywords: Licensing, Biopharmaceutical, Patents, Knowledge Transfer, Topic Modeling

JEL Classification: A1, D2, L00, L2, M00, M1, M2, 03, 031, 032, 033, 034, 035, 036, 037, 038, 039, Q55