Leveraging Licensing for the Global Good

Economic growth, job creation, access to technology: all buzzwords at the top of government agendas around the world. Countries are making conscious policy investments to achieve these socioeconomic benefits.

According to a new report, Leveraging Licensing for Technology Diffusion, Innovation, and Economic Activity, positive, voluntary licensing policies are a crucial means to attract these socioeconomic benefits.

The report explains that through licensing, technology is transferred between companies, maximizing that technology’s form and reach in the market. The licensing and technology transfer process translates into new high-tech products and services for the public.

Thus, a healthy licensing environment – built on positive, voluntary licensing policies, like R&D tax credit mechanisms, market-based incentives, and strong intellectual property (IP) protections – promotes healthy rates of technology diffusion.

Take the U.S., for example.  Licensing has delivered: $150 billion to the American GDP in academic licensing contributions, $386 billion in gross industry output, $80 billion in tech transfer activities revenues, and between 1.1 and 3.8 million person years of employment between 1996 and 2010.

Despite the visible benefits to positive, voluntary licensing policies, some countries employ a more top-down approach that seeks to mandate when and how licensing-driven technology transfer takes place. These regimes pose barriers to licensing-driven technology transfer, like undue procedural requirements and sluggish administrative processes; burdensome legal requirements; and forced licensing and technology sharing.

These barriers, while often intended to promote technology diffusion, in reality hinder it. Countries that pose barriers to licensing-driven technology transfer experience lower rates of payments for use of IP, a proxy measurement for technology flows of high-value assets. This trend is evident in countries like China, Indonesia, and South Africa, whose levels of rates of payments for use of IP lag behind those of their economic peers.

Similarly, in-licensing rates in terms of payments abroad for the use of IP are lower in countries who implement barriers to licensing-driven technology transfer. For instance, Poland and Hungry, which boast positive, voluntary licensing policies, display more than three times higher rates of in-licensing per million people, relative to China, although all three countries maintain a similar per capita GDP.

Rates of technology flows and in-licensing serve as trusted markers of innovation activity and the dissemination of innovation. But to more directly quantify innovation activity and the dissemination of innovation, Leveraging Licensing offers measures of triadic patenting rates, the perspectives of executives concerning whether the latest technologies are available for use, and the degree to which new technologies have been integrated into an economy. In every category, countries with positive, voluntary licensing environments outperformed their counterparts, regardless of market-size or income.

It’s clear: without an environment conducive to IP licensing and technology diffusion, large and growing countries are underachieving at the expense of technology diffusion, domestic innovation, international competitiveness, and economic development.

Conversely, countries that employ positive, voluntary licensing policy frameworks are reaping these benefits and more.

But all countries will benefit from the next great technological breakthrough inspired by IP licensing-driven technology transfer.

Patrick Kilbride is the executive director of international intellectual property for the U.S. Chamber of Commerce Global Intellectual Property Center.

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