Broad Cross-License Negotiations

44 Pages Posted: 9 Jan 2012 Last revised: 2 Jan 2015

See all articles by Alberto Galasso

Alberto Galasso

University of Toronto - Rotman School of Management; University of Toronto - Strategic Management

Date Written: June 19, 2012


In many industries, broad cross-license agreements are considered a useful method to obtain freedom to operate and to avoid patent litigation. In this paper I study firm incentives to sign a broad cross-license as well as the duration of broad cross-license negotiations. I develop a model of bargaining with learning, which predicts that two firms will enter a broad cross-license agreement only if their capital intensities are large enough. The model also predicts faster negotiations when firms have high capital intensities and when the frequency of future disputes is low. I confirm these predictions empirically using a novel dataset on cross-licensing and litigation in the U.S. semiconductor industry.

Keywords: cross-license, semiconductors, patent litigation, bargaining

JEL Classification: 031, 032, C78, L63

Suggested Citation

Galasso, Alberto, Broad Cross-License Negotiations (June 19, 2012). Rotman School of Management Working Paper No. 1982086, Available at SSRN: or

Alberto Galasso (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4


University of Toronto - Strategic Management ( email )

105 St George Street
Toronto, ON M5S 1L2

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