Legal System and Policy of Science and Technology

Knowledge Spillover Effect of Patent Open License System: A Quasi-nature Experiment Based on the UK and Germany

  • Liu Xia ,
  • Chen Li ,
  • Wang Xinyu
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  • (1.Shanghai International College of Intellectual Property, Tongji University, Shanghai 200092, China;2.Department of Economics,University of Gothenburg,Gothenburg 40010, Sweden)

Received date: 2023-02-15

  Revised date: 2023-05-18

  Online published: 2024-06-25

Abstract

Open licensing is an important approach that promotes technology commercialization and spillover. It provides the "indigent inventor" with the opportunity to keep patent protection long enough to be able to commercialize it, and encourages non-exclusive licensing to increase access to patented invention. In some countries, it is named "License of Right" or "Willingness to License". However, there is a long debate over the patent open-license system. On the one side, the 50% reduction in renewal fees is still insufficient to incentivize patent owners, wherein the cost savings are significantly lower than the rent dissipation made by non-exclusive licensing. On the other side, the fee reduction may encourage patent trolls or large companies to renew low-quality patents, which would have a negative effect on subsequent innovation. Thus, this paper combines qualitative and quantitative methods to evaluate the patent open licensing systems in the UK and Germany, for these two countries have implemented the system since 1919 and 1936, respectively, and receive a stable number of registrations per year.#br#First of all, a comparison of the system designs and registration trends in the UK and Germany is made. The basic system settings in the two countries are basically the same but differ in three main ways: (1) German system allows patent applicants to declare open licensing on the day of the patent application while UK requires at least receiving the grant decision; (2) although patent owners who have declared the open licensing could enjoy a half-price discount on patent fees in both of UK and Germany, the bases are different for the total amount of patent fees in UK is approximately $6 589 (41 807 RMB), while in Germany it can be as high as $16 067 (over 100 000 RMB); (3) the UK system is often used as an alternative for compulsory licensing, and the UK Intellectual Property Office (UKIPO) has conducted a comprehensive and intelligent information platform, which allows the public to access relevant information about registered patents.#br#For the empirical analysis, this paper collects the open licensing patent registration information disclosed by UKIPO and the German Patent and Trademark Office (DPMA) from 2004 to 2020. Then, it extracts more patent information to catch the characteristics of the declared patents. In general, Germany and Japan are two of the most common patent owners who have declared open licensing. From the perspective of the patent owners, small enterprises account for 34.5%, large enterprises account for 40.3% of the total declared patents in Germany, and large enterprises account for 67.19% of the total in the UK. According to the distribution of technology fields, the majority of declared patents are concentrated in complex technologies such as machinery, information and communication in both the UK and Germany.#br#Finally, this paper uses a time varying difference-in-differences (DID) approach to test the incentive effects of declaring opening licensing on technology diffusion. The treatment group consists of patents with open license registrations in Germany or the UK, while the control group consists of patents with valid registrations in Germany or the UK, matched exactly one-on-one by using feature variables such as the nationality of the applicant (Applicant_Ctryi), the year of patent application (Appln_Filing_Yeari), the authorizing agency (Appln_auti), the technical category (Tec Sectioni) the size of portfolio (Applicant_Sizei), and the number of backward citations (nBWDi). #br#The regression results show that no significant knowledge spillover incentive effect is observed overall. The interactions of the treatment group are generally insignificantly or significantly negative. The underlying economic interpretation can be explained as follows: overall, the knowledge spillover effect of the open license patent system in Germany and the UK is very limited, only reflected in increasing citations to registered patents of large foreign companies; besides, the study tests the moderating effect of open licensing and patent novelty, and it is proven to be significantly positive, thus, after the declaration, incremental patents are easier to receive the increasing attention from the market. In other words, the more existing technology references and subsequent patent citations the patents have received before the declaration, the more effectively the open licensing system can be used to accelerate knowledge spillover.#br#

Cite this article

Liu Xia , Chen Li , Wang Xinyu . Knowledge Spillover Effect of Patent Open License System: A Quasi-nature Experiment Based on the UK and Germany[J]. Science & Technology Progress and Policy, 2024 , 41(12) : 105 -115 . DOI: 10.6049/kjjbydc.2023020070

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