Comments for Markets for technologies: do they really work? ammour hamza 23 March 2018 For many years, the creation of markets for technologies has been a subject of interest. This concept resolved in causing an economic burden for inventors. The core idea, according to the article, is to shed the light on the ability of technology markets to save and secure Intellectual Property, Patents as well as Trademarks. Nowadays, the entire world is experiencing…Read moreFor many years, the creation of markets for technologies has been a subject of interest. This concept resolved in causing an economic burden for inventors. The core idea, according to the article, is to shed the light on the ability of technology markets to save and secure Intellectual Property, Patents as well as Trademarks. Nowadays, the entire world is experiencing changes and evolution on the level of processing, and technology is no exception. Technological inventions are reconstructing the shape of Intellectual Property as it is known in the present day. Hence, it is becoming more challenging and complex to be shield the Intellectual Property. The transferability of IP may also play an important, if not an essential role, in deploying technology more efficiently and rapidly. Referring back to the article, the idea of technology markets may pave the way for buyers to find their sellers smoothly, and vice versa. However, this market can encounter several challenges that may hamper the fluency of this project in achieving a promising goal. One proposed solution for this matter is to find definite organizations to look after the functionality of these markets. Considering the United States as an example, the USA has been a member of the World Trade Organization (WTO) since 1995. This requires member nations to establish intellectual property (IP) laws whose effect is in line with minimum standards. So there should be few major differences between IP laws in the USA and those of other developed countries. In the United States, creative work is automatically protected by copyright as long as it is both original, independently created, and not copied from someone else’s work. The content of the work should be fixed in a tangible form, i.e. easy to reproduce and communicate over a long period of time. The United States and the EU have the world’s best inventive enterprises. They possess licensed innovation insurance and authorization. The former and the later are both fundamental for empowering advancement in new technologies, animating interest in innovative work, and supporting trades of U.S. products in order to create jobs. Approximately 40 million U.S jobs are directly or indirectly attributable to intellectual property incentive industries. These jobs pay higher salaries to their workers. Therefore, these enterprises lead around 60 % of U.S. merchandise exports and a huge share of services exports. Reference https://ustr.gov/trade-agreements/free-trade-agreements/transatlantic-trade-and-investment-partnership-t-tip/t-tip-10 https://www.nibusinessinfo.co.uk/content/intellectual-property-rights-systems-usa Show less Reply Paolantoni Nolane 13 March 2018 Functions related to financial valuation and technology markets and how patents can be used as inputs in the innovation process can help to cope with a more complex strategic environment. Some authors have shown that filing patents can influence the location of technological innovation and affect the boundaries of the company. This can be considered another function of the patent. For…Read moreFunctions related to financial valuation and technology markets and how patents can be used as inputs in the innovation process can help to cope with a more complex strategic environment. Some authors have shown that filing patents can influence the location of technological innovation and affect the boundaries of the company. This can be considered another function of the patent. For example, Arora and Merges (2004) propose a simple case-study model in which the fundamental choice for acquiring technology-intensive assets is between internal design and the use of an independent firm. They analyze how the choice is affected, on the one hand, by the strength of intellectual property rights and on the other hand, by the existence or not of information leaks (spillovers). A strong patent system thus encourages investment in specialized firms with strong innovation capabilities (Antonelli, 2008). Hicks and Hedge extended this analysis by showing through empirical analysis that in some cases the viability of small specialized firms was large. Arora et al. (2001) emphasized that technology market development has important implications for businesses, especially larger ones: this increases their strategic space. Companies may choose to develop internally and then eventually license or purchase technologies (licensing in). This requires pro-active IP management that has a pivotal role in building and maintaining competitive advantages. IP rights management becomes one of the key strategic capabilities in a context of open innovation. One of the fundamental tensions of management is to exploit these existing key competences (Hamel and Prahalad, 1990) while at the same time expanding the portfolio of these skills through acquisitions and the exploration of new paths. The emergence of technology markets facilitates the management of this tension: – 1) Knowledge can be acquired directly via these markets. – 2) IP rights are also becoming an important tool for the implementation of R & D partnerships, notably through their function of signaling skills. This facilitated access to complementary skills can be used to proactively expand the company’s strategic portfolio by combining these new skills with existing skills or to adapt to changes in the environment such as business sector comparisons (for example between information technology and telecommunications). – 3) New options also emerge when new technological knowledge is created within the firm. IP rights will be used in a traditional way to avoid imitation, but sometimes also to accelerate the diffusion of a technology, including competition (Shapiro and Varian, 1998). More importantly, “go” or “no go” decisions can now be enriched more easily by intermediate decisions to exploit it outside the company (licensing out) or at its borders (spin-offs). . As a result, examples of public interventions in the technology market can be stated. The state may use levers to intervene in the technology market. Indeed, it is possible to increase private investment in research and development, and this is sometimes the goal set by the State through the “public good model”. The insufficiency of private research is due to an imperfect appropriability of the economic results of their innovations by firms. The state can seek to strengthen appropriability, or to fill the private research deficit with its own funding. In the latter case, it increases the private return of research by reducing the cost, whether it finances the company for its research, or it provides (free) technology knowledge from public research, that the company does not have to find itself. The patent remains the most respectful market mechanism because it does not involve direct interference by the state. After four decades of slow growth (from 1 to 2% per year), patenting has really exploded in the United States since the late eighties (4% per year) and in Europe since the mid-1990s. nineties. This reflects an increased willingness on the part of firms to protect themselves by legal means (in a more competitive context than before) and also a strengthening of the legal status of the patent itself, which becomes more effective in limiting imitation. Also, steps in this direction were taken in the United States in the early eighties: Bayh-Dole Act (allows patenting by private agents receiving public funds for research); creation of a federal court that final installment of intellectual property disputes; extension of the field of patentability to new types of inventions: software and genetic material but also methods of medical diagnosis and “business methods” (example: reverse auctions on the Internet). In Europe too, with the creation of the European Patent Office, which issues (indirectly) patents of greater value than national offices, which are more legally robust and the recent acceptance of patents on genetic material. At the global level, the GATT (1994) agreements impose minimum industrial property standards on all WTO member countries and, above all, now integrate intellectual property rights into the web of trade negotiations, giving them new. We are witnessing the resumption of a historic trend towards the strengthening of the patent, which was interrupted at the beginning of the twentieth century. The state must also take into account the ability of agents to set up, spontaneously, institutional arrangements that allow them to some extent to internalize externalities. Technological alliances between firms are a prominent example (research agreements, joint ventures, licensing agreements, etc.). The regulatory framework was developed in the United States (Cooperative Research Act, 1984) and in Europe, to allow such alliances without violating the laws governing competition. Various measures have been taken to encourage cooperation between firms (European framework programs, Eureka, Sematech in semiconductors in the United States, MITI programs in Japan). These coopera- tions allow the internalisation of externalities upstream, while safeguarding competition downstream. • To conclude, policies to support technological innovation involve a very diverse set of instruments, such as patents, subsidies, public procurement, tax aids or public research. The condition traditionally given to public intervention in this technological field – that the social return of research is greater than its private return – now appears to be insufficient. The relative effectiveness of the different policy instruments depends in particular on the information structure specific to each case. • Sources : – https://www.cairn.info/revue-economie-et-prevision-2001-4-page-95.htm – Livre : « Les nouvelles fonctions du brevet, approches économiques et managériales » Economica, Pascal Corbel & Christian Le Bras. Show less Reply messad 10 March 2017 Markets can not exist without an institutional framework, such as well-defined and protected property rights. Otherwise, if left to the sole initiative of private actors, the market function will suffer various failures leading to undesirable situations both economically and socially. Fiber optics in France is already widely used in transport and collection networks as well as in certain local loops dedicated…Read moreMarkets can not exist without an institutional framework, such as well-defined and protected property rights. Otherwise, if left to the sole initiative of private actors, the market function will suffer various failures leading to undesirable situations both economically and socially. Fiber optics in France is already widely used in transport and collection networks as well as in certain local loops dedicated to companies or areas of economic activity. But to achieve the deployment of fiber optics on all homes and businesses represents a very large project, the total cost of which is estimated at about thirty billion euros. The Authority is asked whether it is possible for a local authority, in relation to the competition rules, to intervene on a subsidized public project if this project covers, inter alia, profitable areas. If the public authority intervenes by means of an acquisition of a shareholding or a capital injection into an undertaking which is to carry out the project, it must be assessed whether that investment includes an element of State aid. Article 345 of the Treaty provides that ‘the present Treaty shall in no way prejudice the rules governing property in the Member States’. According to the case law of the CJEU, it is the result of the principle of equal treatment that capital made available to an undertaking, directly or indirectly by the State, under circumstances which correspond to normal market conditions , Can not be classified as State aid. On the other hand, where an equity investment or capital inflows by a public investor does not offer sufficient prospects of profitability, even in the long term, such an intervention must be regarded as aid and its compatibility with the common market must Be assessed solely on the basis of the criteria laid down in that provision. Sources : http://www.vie-publique.fr https://maitrisernotreamenagementnumerique.wordpress.com/ http://www.cairn.info/revue-economie-et-prevision-2001-4-page- http://www.universalis.fr/encyclopedie/intervention-de-l-etat-economie/ http://www4.ac-nancy-metz.fr/Enseignement/ses/ressources/sequences_pedagogiques/terminale/ea/role_pol_ccrence/chap2_role_pol_ccrence_prof.pdf Show less Reply Paul Belleflamme 13 March 2017 Interesting, but I’m not sure to see the link with the blog post… Pauline EXPOSITO 10 March 2017 We know there are two possible choices for a patent holder for the use of his patent; Firstly, he can use his patent as a right to exclude to third parties of the use of this innovation. Patent holder can also sale his patent fully or partially or he mays also opt for the granting of a license on the…Read moreWe know there are two possible choices for a patent holder for the use of his patent; Firstly, he can use his patent as a right to exclude to third parties of the use of this innovation. Patent holder can also sale his patent fully or partially or he mays also opt for the granting of a license on the patent. A license authorizes third parties to exploit or use the invention in whole or in part exclusively or not, and subject to the payment of royalties. So, the transferability of the patent corresponds to assigning the patent or granting one or more licenses. It is therefore an essential function of the patent, since it allows the innovator to appropriate the rents of his innovation, without necessarily having to use the new technology itself. The other advantage of transferability of patents through licenses is that it allows companies to acquire operating licenses for inventions that will complement and enhance their business objectives. Patents play an important role in the market for new technologies since they will facilitate access and sharing. The market for new technologies is a market where the supply of new technologies (i.e. patent’s holders wishing to sell or license) and the demand for new technologies emanating from companies in order to produce. So, we are seeing some kinds of collaborative innovations, in the sense that some companies are only specialized in the production of new knowledge while others are only seeking to acquire license rights to take advantage of them. This is often the case in the pharmaceutical sector, there are large firms that have licensing rights on new molecules found by specialized start-ups or research centers. Granting large operating licenses and reinvesting in research and development allows the development of several other companies within the value chain. Since 2009, incomes generated by the new technology market have increased rapidly, royalties and licensing fees from the sale of intellectual property assets based on new technologies increased by 9.9%. To conclude with the market of new technologies, although trading volumes are lower than merchandise trade, the market for new technologies is growing. This will allow many new companies to enter on the technology market both with the aim of acquiring new technologies to continue to innovate or to generate new revenue flows under the licensing framework. http://www.wipo.int/sme/fr/documents/pharma_licensing.html http://economie.fgov.be/fr/entreprises/propriete_intellectuelle/Brevets/etendue_protection_brevet/#.WMLzIPk1_IU http://www.wipo.int/sme/fr/documents/license_assign_patent.htm Cours licence AES 3ème année – Mme SIMONGIOVANNI Show less Reply Bertille Mazari 10 March 2017 Nowadays exists a ceaseless run to innovation, the existence of patents protects intellectual property (IP). The circulation of idea might be considered as crucial to innovation; a way to increase the level of innovation would be the use of IP markets. Indeed, this currently developing kind of transaction could increase innovation by facilitating knowledge diffusion. Some governments have started to…Read moreNowadays exists a ceaseless run to innovation, the existence of patents protects intellectual property (IP). The circulation of idea might be considered as crucial to innovation; a way to increase the level of innovation would be the use of IP markets. Indeed, this currently developing kind of transaction could increase innovation by facilitating knowledge diffusion. Some governments have started to encourage the establishment of patent/sharing platforms where any entity can access and share promising patented technologies. A number of policy initiatives and instruments are used to enhance the impact of intellectual property markets on innovation. The European commission addressed collective mechanisms which can structure transactions involving patents: Patents pool, clearing houses, patent auctions. The EU commission also initiated the set of an invest fund in IP so that the knowledge economics meets the same growth as the one of risk capitals. This initiative have been made in order to enable small/middle companies to have more access to patents trade and also to increase the incentives to production of IP by scholars, universities.. According to the OECD, the development of licenses agreements meets the objectives of the general interest since it increases the diffusion of new technologies. On an economical point of view, it decreases the entry barrier, promotes an optimal division of industrials activities and eases the exploitation of a large scale technology. All around the world actions are made in order to increases patents transactions. Indeed, the Japanese government established the Innovation Network Cooperation of Japan. Such IP funds will collect patents from Universities, research institutions and companies in order to create patents portfolios. They then encourage dissemination of the patented technologies by broadly licensing their patents to those who wish to use the patent technology. Through this approach, the Japanese government expects to facilitate the circulation and the share of technologies across organizational boundaries. Many governments or institution works in favor of a market for technologies. Denmark has set up a new web-based portal to facilitate co-operation and trade in IP. The World Intellectual Property Organization has set up WIPO Green, a hub aimed at enabling environmental technology owners to make IP and know-how available to users through a searchable public database of available intellectual property assets and resources. The Korean government helped launch Intellectual Discovery, a defensive fund which buys patents that might be asserted against domestic firms. Even some companies are emerging on the “patent trade market”. Innography Patent Market Tracker Company is indeed specialized in providing data about the patent assignment on the US market. Around 100 Million patents and applications are available on this website. As we have seen so far, both market and government solutions exist which could alleviate obstacles and reduce transaction costs. For the future I think that through all this diffusion and sharing of knowledge, companies will step by step abandon their copy-rights. According to the OECD, earning revenue is the major motivation for licensing out, followed by sharing technology with others companies. If we take this into account we may imagine that the tendency will evolve and that the “sharing technology with other companies “will be the first motivation of licensing-out and may let the place to copy-left. Copy-left has already started to emerge for software and on intangibles asset. Why could we not imagine that on the basis of those patent markets, this diffusion of knowledge it will spread and extend to other goods and asset? http://www.oecd-ilibrary.org/science-and-technology/who-licenses-out-patents-and-why_224447241101 https://core.ac.uk/download/pdf/9308436.pdf http://ec.europa.eu/cip/files/docs/consultation-france-french-government-doc3_fr.pdfhttp://www.hbs.edu/faculty/Publication%20Files/12-023_0e95cdce-abbf-46ea-b8cb-15a3ebb054ed.pdf http://www.keepeek.com/Digital-Asset-Management/oecd/science-and-technology/the-emerging-patent-marketplace_218413152254#page43 Show less Reply Paul Belleflamme 13 March 2017 Nice analysis! Emeline Picard 5 October 2016 As said in the article, the intervention of public authorities could be a good implementation to help buyers and patents to find each other. However, the question I asked myself after reading this was to know: can public interventions truly improve the functioning of this market? How far? Public authorities are genuinely interested in curing failure and they can take care…Read moreAs said in the article, the intervention of public authorities could be a good implementation to help buyers and patents to find each other. However, the question I asked myself after reading this was to know: can public interventions truly improve the functioning of this market? How far? Public authorities are genuinely interested in curing failure and they can take care of a misplay only if (1) there is actually a real failure needed to be fixed and if (2) these authorities have the capacities to fix it. These are already two conditions we could surely argue about. For the first one, we can assume the requirement is met because there is actually an improvement in the function of the market to find here. For the second one, things become more complicated. As C. Edquist said “Innovations are the enemy of equilibrium”, meaning we cannot find an optimal situation with this context of innovations. Knowing this, who has the ability to fix the gap between patents waiting to be used and potential buyers? Nobody. From then we have to consider the market differently: improvements are possible until a certain point as no equilibrium can be found. It makes the approach much more modest. For instance, the French government implemented a process called “Patent Buy-outs” that encourages innovation. This mechanism, in addition to be incentives oriented, allows the higher bidders to buy the patent while deleting the price distortion caused by monopolies. In conclusion, public authorities can improve the functioning of the market. The question is to know how far from the equilibrium. We must also keep in mind that public regulation in the innovation sector is heterogeneous because each country has to compose with its own culture, history and its own institutions. Nervertheless, the international context is inducting a shift in the national policies to catch up the delay on innovation and to favor the international arrangements like in the European Union with the Patent Cooperation Treaty (PCT). References: Averch Harvey, “Private Markets and Public Intervention: A Primer for Policy Designers”, University of Pittsburgh Pre, 15 déc. 1990 – 240 pages Edquist Charles, Innovation Policy—A Systemic Approach, October 2002. DOI: 10.1093/0199258171.003.0013 Encaoua David, Foray Dominique, Hatchuel Armand, Mairesse Jacques, « Les enjeux économiques de l’innovation . Bilan du programme CNRS», Revue d’économie politique 2/2004 (Vol. 114), p. 133-168 DOI: 10.3917/redp.142.0133. Kremer Michael, “Patent Buy-Outs: A Mechanism for Encouraging Innovation”,NBER Working Paper No. 6304. DOI: 10.3386/w6304 Show less Reply Aman Gupta 5 October 2016 The world as of today is characterized by technological innovation and fast paced change. Hence IP rights are increasingly becoming very important. The complexity of the task of protecting the IP rights is also increasing. I definitely think the transferability of IP is as important as its exclusivity as one organisation might not have the complete capability to exploit the…Read moreThe world as of today is characterized by technological innovation and fast paced change. Hence IP rights are increasingly becoming very important. The complexity of the task of protecting the IP rights is also increasing. I definitely think the transferability of IP is as important as its exclusivity as one organisation might not have the complete capability to exploit the technology developed completely. And in the end it is the world as a whole that is at loss and not any one individual. There are two ways that patents transferability lead to increased innovation; first the fact that details of innovation have to be disclosed leads to follow up innovation, second they allow innovation firms to access technology that are both time consuming to develop or in some cases impossible to develop due to lack of adequate resources. It is interesting to note that while some organizations are trying hard to protect their technology, there are others which have found ways to make money by opening up their treasure chest of innovation. One such example is the open source platform. The open source developers earn money through a number of different ways, one of them is by selling their expertise. On one hand there are companies like Microsoft that are highly patent protected and on the other hand there are companies like Red Hat, IBM and Google that are contributing and making money through open source. The source of debate has shifted to “Is protecting intellectual property morally correct?” There are arguments supporting both sides. The argument in favour of IP laws is that it ensures that the inventor’s effort is justified and hence acts as a motivation to strive to create much better technology. The argument against it is that it will prevent crowd sourcing. As stated “The spirit of being able to upgrade, improve, enhance and expand the functionality of code through a crowd sourced effort is nothing short of magnanimous” References: https://www.innovationpolicyplatform.org/content/markets-technology http://www.economist.com/node/5014990 https://fee.org/articles/open-source-software-who-needs-intellectual-property/ http://blog.cloud66.com/the-great-open-source-debate-4-things-to-consider/ Show less Reply Rotsart Antoine 5 October 2016 According to the article, it seems pretty clear that a market for technology is a good way to enhance innovation in general. But it also stressed that this market might not be that efficient, and might know some problems such as the long&costly process of creating a license agreement or the time that it takes the firms to find each…Read moreAccording to the article, it seems pretty clear that a market for technology is a good way to enhance innovation in general. But it also stressed that this market might not be that efficient, and might know some problems such as the long&costly process of creating a license agreement or the time that it takes the firms to find each other. There is therefore a nice occasion for the government to intervene and try to make this market work better. One idea that came to my mind was to create some sort of institution that would try to evaluate the true value of a patent. Indeed, each patent is unique and intangible, having therefore no official price. If a public institution would take as responsibility to set a price for each patent according a fixed and rigorous procedure, firms may be more confident in buying a patent because of the “objective valuation”. It would also probably reduce “the costs of negotiating” for both firms, mentioned in the article above. I think this measure could facilitate the commercialization of intellectual property. Another step that can be implemented in order to foster this particular market is to harmonize and enforce the legal framework around the intellectual property. This is exactly what has happened in 2014 thanks to the European Commission with its new patent reform: “the unitary patent”. It consists basically on a patent with unitary effects, meaning uniform protection across the european union (just the countries that has ratified the agreement), but also affects the patent itself as it allows only a single object of property and also a single renewable fee. As a consequence, patents are recognized in (almost) all the european territory, thus making the market more liquid given the increase of bid and ask offers for patents. References http://www.finnegan.com/UnifiedPatentCourt/ https://ec.europa.eu/growth/industry/intellectual-property/patents/unitary-patent/ https://www.innovationpolicyplatform.org/content/policy-intervention-technology-transfer-and-commercialization Show less Reply Surabhi Kothiyal 5 October 2016 As discussed in the article, patents indeed play an important role in fostering innovation in the growing knowledge economy of the world. They offer reward for the effort and risk entailed in developing new technologies, hence promoting new research. The transferability rights they confer helps in creating a market for these patents. Like many markets, however, imperfections exist in the market…Read moreAs discussed in the article, patents indeed play an important role in fostering innovation in the growing knowledge economy of the world. They offer reward for the effort and risk entailed in developing new technologies, hence promoting new research. The transferability rights they confer helps in creating a market for these patents. Like many markets, however, imperfections exist in the market for patents as well. One particularly interesting imperfection exists in the context of setting up common industry standards, where owners of such patents can potentially engage in anticompetitive behaviour and make the market inefficient. In a high tech industry such as telecom, interoperability of devices from different manufacturers is extremely important. Operators often adopt a common technology agreed upon by a Standard Setting Organisation (SSO). Having a common standard helps in faster development of new products in these high tech industries, where overlapping patents and different technologies may make commercializing of new technology prohibitively expensive. SSO thus determines what technologies and patents constitute the industry common standard and gives rise to the concept of Standard Essential Patents (SEPs). The European Commission (EC) describes SEPs as “patents protecting a technology which is essential for implementation of an industry standard developed by a standard setting organization.” SEPs can potentially allow the entities owning these patents to engage in anticompetitive behaviour. One way of doing this is patent ambush, where a member of SSO may not disclose its patents and applications at the time of standard setting, claiming royalties once the industry standard has been established. To prevent this situation, SSOs require their members to disclose their patents at the time of standard setting. An example of a case of patent ambush is the case of Rambus in Europe. Rambus had deliberately concealed its patents and their applications for patents relevant to the technology eventually adopted as the industry standards for DRAM (Dynamic Random Access Memory) chips. This led to Rambus being able to charge royalties that would not have been possible but for its concealment. This inefficiency was eventually removed when Rambus was investigated by the European Commission. In its decision that held Rambus guilty of abusing its dominant position, the EC noted that in the absence of Rambus’ concealment the standard eventually adopted would not have involved Rambus’ patent. Another example of anticompetitive behaviour in this market is the refusal to license on FRAND terms. Once the standard is adopted, the holder of SEP may license its patent on unfair terms, and may foreclose some firms from the market. To prevent this situation, companies that are part of the SSO are required to provide their patents to other company on ‘reasonable terms’. These are called RAND (reasonable and non-discriminatory) in US and FRAND (fair, reasonable and non-discriminatory) in EU. The Apple v Samsung case shows EC’s stance on companies not willing to comply with FRAND conditions. Apple was using Samsung’s SEPs and was willing to enter into FRAND licensing terms. However, Samsung moved the court to prevent Apple from using its SEPs. The EC concluded that this behavio ur was anticompetitive and that Samsung was abusing its dominant position. In the Indian context, the Competition Commission of India (CCI) pursued the case of Intex v. Ericsson and, prima facie, concluded that Ericsson was abusing its dominant position by charging higher royalties for more expensive phones for 2G, 3G and 4G technologies in which it held the largest number of SEPs. According to CCI, this constituted as discrimination as additional royalty did not correspond to higher value add and was contrary to the spirit of FRAND. Therefore, in the specific context of SSOs, it is clear that holders of SEPs may be able to abuse their patent rights under some situations. There is an active role that competition authorities can play in making sure that the market for technology in this case is competitive. References: https://ec.europa.eu/growth/industry/intellectual-property/patents/standards_en http://ec.europa.eu/competition/publications/cpb/2014/008_en.pdf http://www.techpolicy.com/Blog/February-2013/FRAND,-RAND,-and-SEP-Why-These-Acronyms-Are-Import.aspx Rambus case- http://ec.europa.eu/competition/publications/cpn/2010_1_11.pdf http://www.pcworld.com/article/184134/article.html Apple v. Samsung case- http://www.abe-law.com/article/140502MIParticle.pdf Intex v. Ericsson case- http://spicyip.com/2016/05/ericsson-vs-cci-the-future-of-indian-sep-disputes-ii.html Show less Reply Katarzyna Jagielnicka 5 October 2016 Encouraging and disseminating innovation is without a doubt a key in promoting further technological inventiveness and achieving economic growth. However without the incentive in the form of innovation’s exclusiveness, namely a patent, it might not seem advantageous for companies to be willing to innovate in the first place. After all, the purpose of the patent is to allow the innovator…Read moreEncouraging and disseminating innovation is without a doubt a key in promoting further technological inventiveness and achieving economic growth. However without the incentive in the form of innovation’s exclusiveness, namely a patent, it might not seem advantageous for companies to be willing to innovate in the first place. After all, the purpose of the patent is to allow the innovator to enjoy a limited monopoly over some specific period of time. As has Abraham Lincoln once written: “The Patent System added the fuel of interest to the fire of genius.” While his words are still very much up-to-date it is nonetheless important to realize that the real challenge lies in understanding how to reward innovation and allow this temporary monopoly without risking the creation of market inefficiencies resulting from a distorted competition. It has been observed in the recent years that in terms of complex technologies patenting the volume of patent applications is sharply increasing, both at the United States Patent and Trademark Office (USPTO) as well as the European Patent Office (EPO). It is safe to assume that these ‘patent explosions’ might pose a serious threat for the existence of free competition. This in turn could result in distorted prices, lower quantities produced, a restricted or even non-existing diffusion of the new technologies, and decreasing overall incentive to innovate. Thus, what should be the reaction of the government and other public institutions? It has always been a questionable issue whether there is a necessity of public intervention in the light of market failures, and in the event of implementing such interventions one might wonder what will be their effect in the long-run. These interventions can take many various forms, from introducing a new tax, subsidy or antitrust policy to investing in the R&D sector. While all of the above aim at eliminating negative externalities and stimulating the economic growth many argue that focusing too greatly on the short-time effects of such a stimulus may lead to damaging the market’s long-term ability to innovate and grow on its own. This however might not always be the case, and there are always some examples proving this assumption wrong. One of them being the “mission technology” paradigm that “assumes that the government should perform R&D in service of well-specified missions in which there is a national interest not easily served by private R&D” (Bozeman 2000). A good example of such a public intervention is the case of the United States heavily investing in the defence and national security related R&D in the 1980s, which resulted in development of manufacturing techniques using interchangeable parts and mass production. To conclude, one might wonder endlessly about how to find the right method or adjustment policy for a particular market failure without realizing that maybe the right answer is just to let the market be and solve its negative externalities on its own in the spirit of the laissez-faire doctrine. In my personal opinion I do believe that in order to achieve a more sustainable and efficient diffusion of innovation in the long-run governments and public institutions should consider limiting their intervention level to the minimum. It might not always be reasonable while talking about the developing countries’ situation, but nevertheless it has crossed my mind numerous times and there is definitely some truth to it. References: 1. Economic Research Service/USDA, Government Patenting and Technology Transfer. Available from:. [5 October 2016]. 2. von Graevenitz G., Incidence and Growth of Patent Thickets: The Impact of Technological Opportunities and Complexity, The Journal of Industrial Economics 2013, pp. 1-6. 3. Owrid J., Is Government Intervention Creating The Wrong Type Of New Business? Forbes 2014. Available from :. [5 October 2016]. Show less Reply Zhenyu Lao 5 October 2016 First of all, as mentioned in the article, the market of techology can truly benefit the sustainable econimic growth. And many problems or issues are also addressed. However, when thinking about the public intervention to improve the functioning of markets for technology in emerging market like China, that would be totally a different story compare to the mature markets in…Read moreFirst of all, as mentioned in the article, the market of techology can truly benefit the sustainable econimic growth. And many problems or issues are also addressed. However, when thinking about the public intervention to improve the functioning of markets for technology in emerging market like China, that would be totally a different story compare to the mature markets in US or EU. In any case, when a company is deciding whether they should invest in R&D or simply copy and take other’s study, they would compare the cost of R&D investment and the potential cost including monetary and reputation cost. In well developed markets, the cost of copyright and intangible assets infringement is extremely high which prevents the action of copying and infringing. However, looking into Chinese technology market, actually there are very few so called ‘downstream’ firms pruchasing new knowledge with large money because they are aware that once the study is implemented into the new product and the product is launched, there would be so many companies launching this new function or technology without paying one penny. And those companies who infrige the copyright are able to sell at much lower price since under most cases they would not pay the compensation. Consequently, all the companies are reluctant to invest more money on R&D neither from “upstream” firms or in-house labs. How could technology market grow sustainablely in such circumstance? Thus, in my perspective, to solve current issues of technology market in emerging market, the most critical tast is to enforce the patent law in China and also other emerging markets. Although, the legislation of Chinese patent law is quite comprehensive, the execution and enforcement should be strengthened. Only in a fair economic environment, technology market could grow sustainablely. Reference: http://zhidao.baidu.com/link?url=3N3JN8P52NwWY0VLKzE3CDjtLZ6JUlM0d2slc7O485KCovE-oUsLRwIiICIbY4l6ejvEOqbcomTnZ2jszqOXPVMJHPtOdjxX3M3gBt8eOIC Show less Reply Emilie Vanderseypen 5 October 2016 First of all, I think it is better to define what markets for technologies are. It is about “transactions for the use, diffusion and creation of knowledge and technology” (Arora et al., 2001, p. 423). Because it is a market, it represents a meeting between on the one side the buyer which demands the technology and, on the other side,…Read moreFirst of all, I think it is better to define what markets for technologies are. It is about “transactions for the use, diffusion and creation of knowledge and technology” (Arora et al., 2001, p. 423). Because it is a market, it represents a meeting between on the one side the buyer which demands the technology and, on the other side, the seller. At first glance, I thought that such markets are really good because for instance, it balances the lack in R&D on the one hand and the lack of abilities to commercialize or develop the technology that a firm have found. Invention is not innovation and it is more difficult for small firms to develop a product without some help. By this I mean that selling the product can perhaps be more profitable than trying to launch a new product without the ability or the capacity, leading probably to a fail. It could therefore be better to increase the number of new technologies becoming a real success. Markets for technologies can thus encourage small firms to develop new technologies in order to sell it to big firms that have higher returns. But as said in this text, there are also drawbacks like huge costs coming from contracts, uncertainties,… By trying to think about public interventions, I first thought about what were the real problems. Because the difficulty to meet a buyer with a seller is probably one of the most issues, government should support trading mechanism by licensing the invention for example. “When you license your idea, someone else takes your idea and undergoes the risks of developing, manufacturing, pricing, storing and marketing the product. You, as the inventor of the product, simply collect a royalty from every sale.” It is also important to be sure there exist some rules in order to ensure a fair distribution of revenues taken from the exchange. We can think about IP policies (IP rights) or competition policies (that are against monopolies and cartels) for example. Source : http://www.ivetriedthat.com/2014/09/22/how-to-make-money-by-licensing-your-invention-ideas/ https://www.innovationpolicyplatform.org/content/markets-technology Show less Reply Anant Jindal 5 October 2016 For encouraging these kinds of markets, first step for a government is to strength IP laws. I’ll discuss the impact that the policy of strict patent laws might have in general. Let’s compare the two kind of markets, first where patent laws are very strict for e.g., USA and EU and other markets where patent laws are still forming and…Read moreFor encouraging these kinds of markets, first step for a government is to strength IP laws. I’ll discuss the impact that the policy of strict patent laws might have in general. Let’s compare the two kind of markets, first where patent laws are very strict for e.g., USA and EU and other markets where patent laws are still forming and not very strict for e.g. India and china. Now, talking about pharmaceutical companies, in USA, these companies invest a lot (and from their own pockets) in the research and even though production cost of the final medicines is very very low (sometimes even lesser than 1/1000th of their market price), they are sold at a lot of premium which is usually explain as a result of the huge R&D cost which was incurred in discovering the drug and as it happens over a decade or so, the incurred cost keeps on compounding. also, these companies has to compensate costs of the failed studies and that too is included in the price of the drug. also, as these companies have monopoly during the patent life (and till a new better drug comes along), they sell it (a life saving drug) at monopoly price. so, when you purchase the medicine which is absolutely necessary for saving lives, you are actually paying not only for the R&D incurring for producing that drug but also for the failed research by the same company and of course the huge monopoly margins. Coming to the other side of the spectrum, Indian pharmaceutical companies have been able to produce various medicine (called cocktail drugs) and are able to sell it on a price which is a small fraction of the price set by the other companies. Main reason for it is the relatively lax patent laws in india and hence they are able to get away with violating patents and in the process, poor people are able to afford proper medical care in third world countries (for example, african countries). So, the two diametrically opposite arguments from above example are a. is it fair for the companies who are investing hugely in R&D and want to be protected (rewarded) by having the drug patented and gaining monopoly for 20 years (normal life of the patent). b. the other side, that is, the patients who can’t afford the drugs at the “monopoly” price and hence will have to die. shouldn’t we as a society have a moral obligation to save those helpless lives. these two policies lead to diametrically opposite results, and developed markets like USA and EU have sided usually with the first argument. as choosing ‘b’ also disincentivizes market to invest in R&D too, and the main argument to that side is, that if no one will invest in R&D, then no one will be benefitted. So, in summary, first step for emergence of patent market is to make stricter patent laws as if violating these patents lead to no repercussion then the patent has no value at all. Countries are moving in that direction with development, although there is a moral issue which is being ignored in the process. References: http://www.latimes.com/business/hiltzik/la-fi-hiltzik-novum-pharma-20160926-snap-story.html http://time.com/money/4462919/prescription-drug-prices-too-high/ http://www.thehindu.com/2001/02/23/stories/0623000f.htm http://www.nytimes.com/2001/02/07/world/indian-company-offers-to-supply-aids-drugs-at-low-cost-in-africa.html?_r=0 http://usatoday30.usatoday.com/news/world/2001-02-07-aidscocktail.htm http://www.nature.com/nature/journal/v409/n6822/full/409751a0.html Show less Reply Claire Vanherf 5 October 2016 A market for technology is a place that allows buyers and sellers of IP to meet in order to exchange or sale patents. In recent years, these markets have played a crucial role in the diffusion of knowledge. Indeed, the fact that IP laws allowed for the possibility of transferability of patents, through patent-licensing or sale, enabled the exchange of…Read moreA market for technology is a place that allows buyers and sellers of IP to meet in order to exchange or sale patents. In recent years, these markets have played a crucial role in the diffusion of knowledge. Indeed, the fact that IP laws allowed for the possibility of transferability of patents, through patent-licensing or sale, enabled the exchange of patents between firms specialized in production of knowledge and firms that need knowledge in order to produce goods. Many authors have emphasized the positive economic effects of these exchanges: greater diffusion of knowledge, less wasteful inventions, improvements in the allocation of resources within the economy, … However, the market for technology still faces some difficulties in order to be fully efficient. In fact, buyers and sellers seems to have difficulties to find each other. Besides, there remains several costs (negotiate or write the contract) that alters the efficiency of the market. In addition, uncertainty tends to affect the functioning of the market. In this context, public intervention may help to overcome these market inefficiencies and ensure that society reach a better outcome regarding innovation and technologies. For instance, the government can take policies in order to promote research within universities. Indeed, universities are crucial players that produce knowledge for firms that are looking for innovation opportunities. The EU that promote and allow a significant budget for the development of “cluster” constitute a good example of such policies. According to the EU, “clusters are the concentration of economic activities in groups of related industries in a specific location that are connected through multiple linkages and spill-overs”. By gathering firms and universities of the same industry in a specific location, these policies aim at fostering exchanges between universities and firms. References : Yanagisawa, T. and D. Guellec (2009), “The Emerging Patent Marketplace”, OECD Science, Technology and Industry Working Papers, 2009/09, OECD Publishing. https://www.innovationpolicyplatform.org/content/licensing-and-markets-ip http://www.oecd.org/innovation/policyplatform/48137710.pdf The European Commission(2016), Smart Guide to Cluster Policy, Belgium. Show less Robert Heyse 4 October 2016 The creation of an efficient market for IP is certainly desirable for both inventors and the consumers of inventions. However, as the article points out, there are some factors that are hindering the efficient transfer of IP. In the following, I will take a look at what both Patent Assertion Entities (PAEs) and public authorities could do to make the…Read moreThe creation of an efficient market for IP is certainly desirable for both inventors and the consumers of inventions. However, as the article points out, there are some factors that are hindering the efficient transfer of IP. In the following, I will take a look at what both Patent Assertion Entities (PAEs) and public authorities could do to make the transfer of IP more efficient. A PAE, or patent troll, is a company that buys patents and attempts to make money by filing lawsuits for patent infringement. Even though PAEs are predominately criticized for their doings, they still provide a value in helping to create a well-functioning capital market for patents (Blumberg 2016). Nathan Myhrvold, CEO of a well-known PAE named Intellectual Ventures, wants to create a functioning invention capital system. His company is trying to attract private investors by bundling patents in a portfolio and thereby diversifying their risk. They also use this strategy to lower the transaction costs of their customers, who are often in need for the necessary interrelated patents in order to roll out a new product. Moreover, the recent emergence of patent backed securities could help to increase the size of the patent market. The fact that it still remains complicated to valuate IPRs is hindering the diffusion of these new and promising financial products (Myhrvold 2010). This is where public authorities should become active, for example by establishing an organization that is monitoring IP valuation practices. Such an institution would increase confidence in IP valuation quality and enforce generally accepted principles and standards. The transparency problem in IP valuation could be dealt with by introducing an additional reporting section for IP to the IFRS (Expert Group 2013). Another problem that is hindering the creation of an efficient market are differences in IPR law and IPR culture between developed and emerging markets. The enforcement of stronger IPRs across the world should reduce licensing costs by lowering the incentive for breaching a contract. Furthermore, they give the licensor a better opportunity to set and monitor the conditions under which the licensees operate (Maskus 1997). Here, public authorities play an important role to standardize IPR law across the world. An example for such an effort is the World Intellectual Property Organisation (WIPO), a UN agency that is responsible for managing several treaties that regulate IP protection. The TRIPS Agreement from 1995 was further requiring WTO members to follow extended standards for IP protection. More recent efforts include bilateral and regional trade agreements mostly in and between the US, EU and Japan that are seeking a higher level of IP protection. It has also been discussed to include IPR protection in the TTIP (Cîrlig 2014). In conclusion, both public authorities and PAEs play an important role in trying to decrease the uncertainty that is hindering the creation of a well-functioning market for IPRs. Public authorities should continue to work on stronger IPRs across the world. Moreover, they should support the efforts of PAEs like Innovative Ventures by solving the problem of IP valuation. Sources: Blumberg (2016), „Why patent trolls won’t give up“, Techcrunch, URL: https://techcrunch.com/2016/06/05/why-patent-trolls-wont-give-up/ Myhrvold (2010), „The Big Idea: Funding Eureka!“, Harvard Business Review, URL: https://hbr.org/2010/03/the-big-idea-funding-eureka The Expert Group on Intellectual Property Valuation (2013), „Final Report“, European Commission, URL: https://ec.europa.eu/research/innovation-union/pdf/Expert_Group_Report_on_Intellectual_Property_Valuation_IP_web_2.pdf Maskus (1997), „The International Regulation of Intellectual Property“, Institute for Agriculture and Trade Policy, URL: http://www.iatp.org/files/International_Regulation_of_Intellectual_Prope.htm Cîrlig (2014), „Overcoming Transatlantic differences on Intellectual Property“, European Parliament, URL: http://www.europarl.europa.eu/RegData/bibliotheque/briefing/2014/140760/LDM_BRI(2014)140760_REV1_EN.pdf Show less Reply César de los Rios 4 October 2016 The nature of innovation markets is very different to the one of tangible goods markets (let’s say, for instance, the market of apples). First, as the article mentions, and as Kenneth Arrow would argue, as in a free market the innovator couldn’t appropriate the whole returns to their work, the amount of innovation in such market would be lower than…Read moreThe nature of innovation markets is very different to the one of tangible goods markets (let’s say, for instance, the market of apples). First, as the article mentions, and as Kenneth Arrow would argue, as in a free market the innovator couldn’t appropriate the whole returns to their work, the amount of innovation in such market would be lower than it would be in a perfect market context. Next, the innovation market structure is not perfectly competitive: one can identify leader and follower firms (that is, each firm has its own market power), which implies that the largest firms have the advantage to launch an innovation into the market in terms of profitability, as they are more recognized than the small ones. This implies that the larger firms have a higher incentive to launch innovations, lesson that can be extracted from the blog post. They put on a higher value to innovations than the small firms. The situation is, as mentioned in the blog post, that it seems more profitable for the big firms in the innovative industry to let the smalls firms develop the innovation and to, as each firms assign a different value to innovations, buy the innovation from them. The problem that arises is that it is difficult for the small firms to identify the needs of the large firms in terms of innovation, which means that the innovative developments being done in the industry may not match up at all with what is actually being demanded, that is, we have an imperfect information situation. In order for the innovation market to work efficiently, some policies—public or private–must be applied. We focus now on how public interventions would contribute to solving this problem. The first policy that would arise is simply the allocation of resources to incentive R&D: in fact, a higher R&D expenditure would mean a higher probability of innovative success (see, for example, the Rommer R&D model applied to economic growth) and more innovations in general, which means that it would be more probable to find a match-up between a developed innovation (by a small firm) and a needed innovation (by a large firm). One can watch and learn from Israel, a tiny country that is known for its highly innovative markets (Business Insider, https://goo.gl/ZwBlxx). Next, although a private, similar solution (IdeaConnection) has already emerged, what a government should prioritize is the creation of a database or a search algorithm in order to link up what is being demanded in the technology markets to what can be supplied in said markets; by doing this, the probability of a match-up would definitely grow and an aggregate value would arise in those markets, which would ultimately be good for the whole economy in terms of growth, ceteris paribus. Finally, the government should seek a product market expansion. That is, the firms that compose the technology markets (at least the big ones) also sell a final product, and so if the market for that final product is growing over time, that would mean that big firms would find buying innovations even more profitable and so more innovations would be demanded in the technology market, which, again, raises the probability of the match-up. Show less Reply Akalibu Guélord 3 October 2016 Market for technologies is one of the biggest market at the moment and, therefore, the most evoluating we kwow. It is too difficut to create laws for regulating this kind of market because it is always evoluating, at each moment. One of the reasons which can make this sector working badly is that we're living in a two-hierarchical and vertical…Read moreMarket for technologies is one of the biggest market at the moment and, therefore, the most evoluating we kwow. It is too difficut to create laws for regulating this kind of market because it is always evoluating, at each moment. One of the reasons which can make this sector working badly is that we’re living in a two-hierarchical and vertical system of industries which imply two ways to be regulated. As it is said: “The transferability of patents (via sale or, more frequently, via licensing) paves thus the way for vertical separation in high-tech industries, with ‘upstream’ firms or institutions specializing in the production of new knowledge and ‘downstream’ firms buying and applying this knowledge.” Be careful, I’m not saying that transferability is not a good Ip law but i’m saying that those 2 separations systems lead to 2 finalities and, finally, two kind of laws in the same global markets. We’ve the Ip law where we find the exclusive rights and the transferability rights as principles (upstream and producing firms) and we’ve laws for industries for buyers and sellers (downstream and applaying firms). Ip law is more difficult to sustain because of “patent rights”. The rules of patent property is an effecient rule but, as we’ve seen before, can result to an innefiency market by the processus of “patent troll”. To avoid this, we’ve to make an unify law (follow myself) which imply all industries in a same systems (producers and applyers) because (I think), we’ve more freedom in a Patent Property systems than in other. So, more freedom can lead to more freedom to cheat and this could be the reason of the issue in transferability law. A bit like European Union intervention or Pigouvan taxes intervention. Don’t know exactly whay kind of intervention can we proceed for (taxes, fines, etc) but I know that unifying rules could result us to have more vision on issues. Show less Reply Hattori Tatsuaki 3 October 2016 This article remind me that market for intangible asset such as market for technologies is far more complicated than the normal market because there exists very large uncertainty. Thus, both sides of participants of market for technology, in this case patent sellers and buyers might avoid to transact because it is uncertain that buying or selling patents maximize their profit.…Read moreThis article remind me that market for intangible asset such as market for technologies is far more complicated than the normal market because there exists very large uncertainty. Thus, both sides of participants of market for technology, in this case patent sellers and buyers might avoid to transact because it is uncertain that buying or selling patents maximize their profit. Since transferability of patents has some crucial positive role in economy as Pluvia-Zuniga and Guellec (2009) shown, this illiquidity of market for patents is serious problem when we consider the social welfare. A. Hagiu and David B. Yoffie (2013) saying there are mainly three points which makes markets for patents illiquid and inefficient. First, pricing patents is difficult not only because it is intangible assets but also it is unique and difficult to compare with other assets. In other words, there is no standard price for patents. Second, searching cost for both sides is quite high. On the buyers’ side, they have to find all current users and potential application of their patents. On the sellers’ side, they have to find all prior art and consider it can be used for them or not. Third, patents transactions always in shadow of litigation and this problem create large cost. Of course, there are a lot of uncertainty and problem that should be considered, but these problems are very fundamental ones and I assume solving them could make the market more efficiently. Thus, I will focus on these three problems to think about potential intervention. I believe that one of the effective intervention is that government to be IP intermediaries. I think that private IP intermediaries have very sophisticated way to remove uncertainty. For example, a firm PATENT INTERATION offering a lot of services such as patent search, scoring patents, patent visualization and so on. These functions could lower searching costs and help pricing and if governments set the concreate low related to patents transaction to prevent litigation, it could solve third problem in addition to above two problems. In Japan, it is said that 70% of the patents are sleeping because of illiquidity of market for patent. Japan Patent Office (JPO) crated NPO which enables to make market for patent like stock market. However, it seems not to work well. I hope government-led intervention starts as soon as possible. References ⑴Pluvia Zuniga, M. and D. Guellec (2009), “Who Licenses out Patents and Why? http://www.oecd-ilibrary.org/docserver/download/5kskrw3rd8xp.pdf?expires=1475498765&id=id&accname=guest&checksum=B725BB34639A30EF1F41FDCBB6B297FC ⑵Andrei Hagiu and David B. Yoffie (2013) “The New Patent Intermediaries: Platforms, Defensive Aggregators, and Super-Aggregators” http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.27.1.45 ⑶PATENT INTEGRATION https://patent-i.com/ja/index/ ⑷Japan Patent Office http://www.jpo.go.jp/indexj.htm Show less Reply Lachapelle Nathan 2 October 2016 At the first glance I thought market for technologies was a good idea. Indeed the markets seem appropriate when we think about a place where you can sell the product of your work (in this case innovations). Put them on the market and the ones with the highest valuation would purchase it. It is great for firms that have innovations…Read moreAt the first glance I thought market for technologies was a good idea. Indeed the markets seem appropriate when we think about a place where you can sell the product of your work (in this case innovations). Put them on the market and the ones with the highest valuation would purchase it. It is great for firms that have innovations that they cannot use, or do not want to use. It is also good for firms that do not invest in R&D but that are looking after new innovations. As pointed out by Pluvia-Zuniga and Guellec (2009), there are a few positive economic effects of such markets. But then I realized that since bigger firms have bigger capacity to buy on those markets, we face asymmetries and thus it might again favour the biggest firms to buy those technologies, leading to a situation of monopoly/ oligopoly where the social surplus is not maximised. The first reason why they are more advantaged concerns the large costs that firms would face. Since large company have what we can I would call here a “deep pocket”: meaning they have sufficient financial capacity to bear those costs, while the small ones do not, and have to use the market to finance themselves. I use the analyse of Bolton and Scharfstein (1990) to show that in the presence of imperfect financial markets, the big firm would crowd out the small firm, thus leading to a situation where the markets are inefficient and where the government should step in. The other reason, is that since bigger companies have bigger financial capacity they can buy more innovations making them scarce, or simply bidding more so that the smallest company has no way to purchase it. This could lead to inefficiency since it might be that the small firm sees more utility in this innovation than the big firm but cannot bid more. There, I am thinking about a way where the government could put his nose into the market and look into details when the government considers that this big firm buying this technology would lead to a non-satisfactory situation and would allocate it to the second best bidder (the small firm), which would lead to a better outcome. Moreover, I thought about when should the government step in. And I thought about what kind of innovations are better for society. In their paper, Jaffe, Newell and Stavins (2004) point out that some innovations are more worth subsidizing than others. In this case it is about environmental innovations, indeed they do not give to the innovator a great added value, mainly because finding a new innovation that reduce pollution -for instance-, does not directly benefit the firm, it will produce positive externalities, for which the firm is not rewarded. It is a thing that the government wants and should subsidize because externalities are “markets’ failure”. As they put it: “The solutions […]: one is to foster the development and diffusion of new technology by designing environmental policies to increase the perceived market payoff and maximize flexibility in compliance. The other is to implement policies aimed directly at encouraging the development and diffusion of environmentally friendly technologies”. This can also be generalized to all activities generating positive externalities, I am thinking about the health sector, but also the educational sector. There is really a leeway for public intervention I believe. Finally I could think of the role of the state as an intermediary between the sellers and the buyers, but at a lower cost (they would charge a lower fee) than the intermediaries firms on the market, so that more firms are incline to meet and conclude deals that would results in more revenue for the state. References JAFFE A., NEWELL R., & STAVINS R., (2004), A tale of two market failures, (page consulted on 2/10/2016), [PDF] Discussion paper, https://core.ac.uk/download/pdf/9308436.pdf BOLTON P., SCHARFSTEIN, (1990), A Theory of Predation Based on Agency Problems in Financial Contracting, (page consulted on 2/10/2016), [PDF], http://www.people.hbs.edu/dscharfstein/theory_of_p_90.pdf PLUVIA ZUNIGA M., GUELLEC D.(2009), Who Licenses out Patents and Why?: Lessons from a Business Survey, OECD Science, Technology and Industry Working Papers, 2009/05, OECD Publishing. http://dx.doi.org/10.1787/224447241101 Show less Reply Giulia Sargenti 2 October 2016 The investments in R&D are at the very basis for future growth and development of our society worldwide. I personally think that the state has an active role, or at least should have, in broaden the knowledge of new technologies and new strategic tools that have a positive impact on the well-being of the society. The existence of a market…Read moreThe investments in R&D are at the very basis for future growth and development of our society worldwide. I personally think that the state has an active role, or at least should have, in broaden the knowledge of new technologies and new strategic tools that have a positive impact on the well-being of the society. The existence of a market where new technologies are traded between firms, research centers and universities may be a good strategy to strengthen the capabilities and incentives of doing research. The sell and purchase of patents can be a stimulus for many companies to invest and spend in research field since they will have the possibility to return the costs by selling the inventions. This, as said, will bring a diversification of labor inside research fields that can benefit the firms on one side, having a wider range of innovation offered to draw with lower costs, and also the research centers on the other which will be better financed in order to produce new knowledge. As said above in the article, this kind of market may have difficulties in its working. Along with troubles on where to find buyers and sellers, firms may price their inventions too high and this will lead to hard negotiation costs and, in the worst scenario, even to the exclusion from the market of small and medium-sized companies with hard complications in terms of competition. Again, there may be misleading behaviour by part of the inventors in order to gain more profits in the future selling of their findings. All these aspects are of important relevance and should be addressed to the analysis and control of an external actor (i.e. public authority) with power to intevene in the market. This may be the case of a public intervention aimed to widen the knowledge of new technologies by incentivating the cooperation between firms operating in the same field allowing those who do research together or share their findings to pay less taxes once applied their new invention. Moreover, the public intervention may be addressed in the sense of organizing annual meetings per field where firms are encouraged to share their new findings with the best innovations receiving a prize (which can be thought in many ways). What I would like to stress is that, in my opinion, public intervention should be thought in terms of a third party regulating, supervising and financing the market but not intervening as a common actor in it. I would like to shortly report here an example of what I have in mind hoping to make clearer my perspective. In the United States, in December 1980, the Bayh-Dole Act was approved. It dealt with the intellectual property legislation about federal-funded research and it allowed universities and non-profit research centers to patent and license the inventions they made. This legislation completely reversed the previous situation in which the innovations were to belong directly to the federal authority that invested in them. This change contributed massively to the increase in the trade of patents. Before the Bayh Dole Act the U.S. authority had collected around 28.000 patents but only 5% of them were traded and licensed. The reason to this may be found in the fact that the governement has less incentives to return the costs by licensing and trading patents since it can always draw money from taxes or elsewhere; this reasoning, instead, does not suit for companies or non-profit organizations. Sources: https://www.autm.net/advocacy-topics/government-issues/bayh-dole-act/ https://en.wikipedia.org/wiki/Bayh%E2%80%93Dole_Act https://www.innovationpolicyplatform.org/content/markets-technology Show less Reply Marc Abou Jaoude 2 October 2016 As mentioned in the article, the most important aspect of such a market in my opinion is the cost benefit linked to acquiring a technology as opposed to developing and spending endless sums in an in-house R&D program. This is obviously arbitrary given the fact that the costs linked to purchasing the new form of innovation from a third party…Read moreAs mentioned in the article, the most important aspect of such a market in my opinion is the cost benefit linked to acquiring a technology as opposed to developing and spending endless sums in an in-house R&D program. This is obviously arbitrary given the fact that the costs linked to purchasing the new form of innovation from a third party still need to be lower than the costs a firm would spend on an in-house R&D department tasked uniquely with innovating. Another major advantage is the notion of specialisation, a notion also brought up in the blog post. Firms will be able to specialize in what they’re best at for instance a firm whose main strength is to commercialize products will no longer have to worry as much about developing their own R&D programs given the fact that third parties (whose main goal is innovation) will do it for them. 2 birds are hit with one stone so to speak because the commercial firms can focus mainly on their commercial strategy whereas the little R&D firms can focus on what they’re good at which is creating new technology potentially allowing firms to streamline their costs of production. The market for technology has the potential to be truly prosperous. The small firms focused solely on R&D will benefit greatly from being solicited by other companies and after a repeated effort this could lead to partnerships being formed which is highly beneficial for the firm interested only in innovating. All this being said, there is still a fair share of scepticism linked to the functioning of a market for technology. If technology is auctioned off to the highest bidder, then firms without the means to match their rivals’ bids will be left behind. This could severely hinder several markets whereby the firms with greater means and in a dominant market position could simply outbid their smaller rivals in order to ensure that they don’t get access to a technology that could help them be more competitive. Finally, there is an inconvenience that is not negligible: it is the question regarding the complexity of such a market. The transactions are complex and unlike what people are used to in a traditional marketplace. It is a market that, in my opinion, is only in a primitive state which means that numerous questions need to be answered and numerous interfaces need to be constructed in order to ensure the fluidity of one such market. I echo what Mr. Belleflamme says about the potential of public intervention. Public intervention is often vital in helping to regulate and properly/efficiently set up new markets. In conclusion, we can safely say that much uncertainty clouds the market for technology. In this moment in time, it can either turn out to be a prosperous market that revolutionises the world of business and economics, or it can deplete and fade away if no intermediaries are brought in to ensure its efficiency. At the end of the day, creators can create new forms of technology but if they don’t have a platform on which to easily sell off their work to interested parties, then they may be discouraged. One thing is for sure though, this is a market to keep an eye on. Show less Reply Sambit Das 30 September 2015 While a market for knowledge, a public good, can be one with under-production, a market for technology with protection could lead to under-consumption given the issues with pricing. One issue in this market that comes to my mind is that even if a seller-buyer pair was found, it may not necessarily translate into welfare for the society. There would always…Read moreWhile a market for knowledge, a public good, can be one with under-production, a market for technology with protection could lead to under-consumption given the issues with pricing. One issue in this market that comes to my mind is that even if a seller-buyer pair was found, it may not necessarily translate into welfare for the society. There would always be innovation in such a case, but not many would benefit from such innovations. In such a case intervention has to ensure that there is no elimination of competition in the market. Another issue as already pointed out, is the lack of innovation due to uncertainty in returns. Intervention in such a case has to necessarily address the following things; one being ensuring cost recovery in case no buyers of an R&D output are found, and the other being ensuring production despite regulatory pricing for essential R&D, for ex life-saving drugs. One way of intervention would be if governments could share initial costs of sponsorship which gives reduces the risk for the innovators. The Department of Science and Technology, Govt. of India, has co-sponsored many projects where the possibility of finding a buyer is not very high. Once successful, the returns could be shared by both the parties. Another kind of intervention comes from the society as a whole. Many innovative products today, like Open Source software have willing users, but not willing buyers. In such a scenario, both value added services as well as crowd-sourcing could help sustain the market. Crowd-sourcing reduces the costs for the developers and improves the product, whereas willingness to adopt value added services increases returns to the creators. Show less Reply Van Oost Léopold 30 September 2015 First of all, this article shows us that the market for technologies is way more complicated than standard market but it also very interesting to analyse. In one hand, the article points out the difficulties that buyers and sellers meet to find themselves. It also explains that the related costs of a transaction are too large. Finally there is also…Read moreFirst of all, this article shows us that the market for technologies is way more complicated than standard market but it also very interesting to analyse. In one hand, the article points out the difficulties that buyers and sellers meet to find themselves. It also explains that the related costs of a transaction are too large. Finally there is also uncertainty around that kind of market because patterns are uncertain. In another hand, the article points out the advantages of a market for technologies. The question is thus “What kind of interventions of public authorities can be implemented to help the market for technologies?” The idea of an European market of patterns that looks like a stock exchange has been analysed in 2010 on request of the European Commission. The conclusions were that such market is kind of utopia because of two reasons: it is difficult to price a pattern and having the rights on a pattern does not mean that you are able to exploit the invention. I believe that one solution might be public authorities become IP Intermediaries. In their paper, Hagiu and Yoffie define IP Intermediary as “an organisation (firm or not-for-profit entity) that directly facilitates the sale or licensing of patents from owners-creators to users”. For example: The creation of a new European body in charge of being an IP Intermediary could be the begin of a solution. Indeed, such a body could help buyers and sellers to find themselves but I believe it would not be enough to really help the market for technologies. In my mind, the EU and the public authorities also have to work to reduce the related cost of a transaction. As explained in the article, those costs can be very large and can discourage buyers and sellers. Authorities have to encourage the reduction of such costs. For example, the creation of a standard contract or some policies. But I also believe that buyers and sellers can collaborate on their own, without European legislation, to limit the related costs of those transactions. As it has been said in the text, patterns are uncertain, it is one of their characteristics. It is thus difficult for the public authorities to intervene on that problem. A company that buy a pattern have to accept that there is a high risk linked to this transaction. To conclude, a market for technologies has pros and cons. There are some possibilities of intervention from the public authorities to improve that market, but buying a pattern will always be a risk for a firm. References: – MENIERE Y. (2011). Vers une bourse des brevets ?. IPdigIT. (http://www.ipdigit.eu/2011/02/vers-une-bourse-des-brevets/) – EUROPEAN COMMISSION. (2010). Proposition pour la mise en place d’un Fonds Européen des brevêts (http://ec.europa.eu/cip/files/docs/consultation-france-french-government-doc3_fr.pdf) – HAGIU A. & YOFFIE D. (2011). Intermediaries for the IP market. Harvard Business School. (http://www.hbs.edu/faculty/Publication%20Files/12-023_0e95cdce-abbf-46ea-b8cb-15a3ebb054ed.pdf) Show less Reply Auguste Debroise 30 September 2015 What I remind from this article is that we consider the major problem of the innovation market is the fact that the meeting between buyer and sellers in the case of exchanging patent, licensing, sales… is quite hard. They have also difficulties in negotiating the deal as P.Belleflame said in his article. I want to comment on something a little bit…Read moreWhat I remind from this article is that we consider the major problem of the innovation market is the fact that the meeting between buyer and sellers in the case of exchanging patent, licensing, sales… is quite hard. They have also difficulties in negotiating the deal as P.Belleflame said in his article. I want to comment on something a little bit different than this problem, but this is something that make me put some questions. P. Belleflame said in his article that some market where the innovation play a key role (like the pharmaceutical market) tends to be divided. The big companies focus more on the running of new patents to a large scale, patents that they have bought to start-up, who are more focus on research. Of course, as it is said in the text, it give a lot of positive effect, like the increasing in the diffusion of technology or the increase in downstream competition. But I have some questions of the negatives effect right here. If the big company who are become very competitive on the so called “downstream market”, are the only one who produce drugs, I suppose that they are the one who decide which patent they buy and exploit. They are of course trying to maximize their profits, so we can assume that they will buy only the patent that they consider the most profitable. But in this market, there are some drugs who concerns only a few % of the population, so if the firms want it to be profitable, they will have to set a high price on this medicines, or they will refuse to buy the patent (who can be very expensive), and the medicine will never be commercialize. So we could assume that being aware of this, the future start-up will only focus on research that will impact the most people as possible, so they can sell easily their patents to big companies. My question is the following: Will we have in the future a growing disinterest in research that reach less people if the state does not intervene in this particular market? Show less Reply Charles Brassinne 29 September 2015 The existence of patents as well as their transferability have created a market for technology and this market has grown substantially over the last decade. It is undeniable that the so-called “transferability”, through the sale or licensing, of patent rights has an overall positive effect on society. Therefore, the creation of such markets enhancing the exchange and spread of knowledge…Read moreThe existence of patents as well as their transferability have created a market for technology and this market has grown substantially over the last decade. It is undeniable that the so-called “transferability”, through the sale or licensing, of patent rights has an overall positive effect on society. Therefore, the creation of such markets enhancing the exchange and spread of knowledge and technology is globally desirable. However, I would consider licensing and the sale of patent rights in two different categories in terms effect on society. Indeed, I can see at least three positive effects related to licensing of technology. Firstly, licensing makes technology available for a broader set of actors and lower barriers to entry. Therefore, increasing competition in the underlying market. Moreover, licensing also ensures that “assets are used by the agent with the highest valuation” as stated in the present article. Finally, licensing encourages the development of new technologies as it secures even more the return on investment made by the institutions investing in these technologies. Regarding the sale of patents, it is true that this last positive effect of licensing equally applies. However, there is also a risk that companies with too much cash will buy patents not necessarily to use it but rather to prevent other players in the market to benefit from this technology. In such a case, the sale of patent rights would trigger abuse of dominant position, decrease competition and prevent the proper use of the new technology. As of today, the market for technology is experiencing several issues and is not yet efficient. There are two main issues related to the trading or licensing of a patent. The first one comes from the inherent uncertainty of its valuation (Troy, I., Werle, R., 2008). Indeed, patents being intangible assets with a value that is most of the time only potential and nearly unpredictable, it becomes really hard to determine a fair price. Consequently, the contracts are usually negotiated at high transaction costs and, if any disagreement should arise along the contract creation, the parties will meet in courts, increasing even more the costs of transferability. The second source of inefficiency comes from the fact that “buyers and sellers usually have a hard time to find each other” as stated in the present article. When I look over these issues of trading and licensing patents, it occurs to me that information is key in the market of technology. Moreover, because the society would clearly benefit from a more efficient IP market, the governments should intervene in order to improve the current situation. First of all, the governments should organize a specific and centralised market place for the trade of patent rights that would facilitate the meeting between potential buyers and sellers. The potential sellers would register the IP they are offering and other information that could be useful for assessing its value. Secondly, the governments could offer audit services or specific tools for patent rights valuation. As mentioned earlier, this is something really difficult to implement but at least some basic tools could help companies to get a rough idea about the product that is involved in the transaction. Thirdly, the governments should make available standardised contracts that could be used for the transaction of different kind of patents or licenses. This way, the parties involved in the transaction would save money on the costs related to the creation of the contract. Finally, referring to my position regarding the potential misused of patents when those underlying are bought, I think that specific regulations should be put in place in order to ensure that the sale will be realised under certain conditions of competition. For instance, the company that acquires the patent would have to prove his willingness to use it for improving the current state of its business. Sources: http://www.ipdigit.eu/2013/11/markets-for-technologies-do-they-really-work/ TROY, I., WERLE, R. (2008), Uncertainty and the markets for patents, retrieved online, http://www.mpifg.de/pu/workpap/wp08-2.pdf Show less Reply Alberto Fragapane 29 September 2015 Technlogy needs lots of information to be implemented. Sometimes these informations are owned by the public authorities and their diffusion would be sufficient to give a boost to this market. For this reason a great opportuniy for the governments to improve the functioning of markets for technology is to implement the diffusion of Open Data. Open Data are informations owned by…Read moreTechnlogy needs lots of information to be implemented. Sometimes these informations are owned by the public authorities and their diffusion would be sufficient to give a boost to this market. For this reason a great opportuniy for the governments to improve the functioning of markets for technology is to implement the diffusion of Open Data. Open Data are informations owned by the Public Authorities, make available for citizens and firms in the form of datasets. These data have been collected for years and have no copyright restrictions or licenses. They are related to demography, cartography, economy, environment, meteorology, sanitary and so on and so forth. They can be a great source of informations, a great starting point that can improve the quality and reduce the costs of the market for technology. Many countries are developing this kind of service, for example USA (www.data.gov ), Canada (www.data.gc.ca ), New Zealand (cat.open.org.nz ), Australia (data.australia.gov.au ), UK (data.gov.uk ) and Italy (dati.gov.it). I reported the national websites, bust there are lots of city website where the public authorities supply the data related to their specifics territories. These provisions of data can be associated with the organization of contests in which citizens or firms must produce a technology using Open Data. The winners can be rewarded with money but also stages, media visibility and formation. One example of this is the “Openapp Lombardia contest”, organized in Italy (http://www.openapp.lombardia.it/). Summing up: implementing the diffusion of Open Data, a government can either increase its accountability, supply new services to its citizens and contribute to the creation of new economies. Sources: -Workshop :«Open data: problems, results, perspectives in the experience of Regione Lombardia» – , organized in Milan for the course in Electronic Comunication Law at the “Università degli Studi” by Professor Marco Orofino. The workshop has been held by Paolo Mora, Ferdinando Germano Ferrari and Romeo Penzo, (http://www.unimi.it/news/62315.htm) Show less Reply Mélodie Marchal 28 September 2015 What I can conclude of “Markets for technologies: do they really work?” by P. Belleflamme is the market of technologies is complicated. First of all, we are all agreed about the necessity to have IP law to create exclusive rights given the incentive to engage innovations activities before someone else. And its second role is creating transferable rights…Read moreWhat I can conclude of “Markets for technologies: do they really work?” by P. Belleflamme is the market of technologies is complicated. First of all, we are all agreed about the necessity to have IP law to create exclusive rights given the incentive to engage innovations activities before someone else. And its second role is creating transferable rights to make sure agents can use technology and so create a market. But another important point it the role of patents for the development and the functioning of this market. However market of patents is difficult to organise according these articles for 3 mains reasons. The first one is about the uncertainty of the value of the patent; the second one is the high research costs and finally, the fear of litigation. So how can we make this market liquid and efficient? This question of liquidity and efficiency can be solved by IP intermediaries. In fact, they can find economic opportunities in proposing solution to market failures. Personally, I think patents need to exist to give incentive to make innovations. In fact, if we make innovations and everybody can use it, makes profit on it but without having to pay the research cost, I completely understand firm to have an incentive to wait another make innovation before. So patents are important to HAVE innovation and R&D. As says Charles Duhigg and Steve Lohr in an article published in the NY Times on October 2012: “Patents are vitally important to protecting intellectual property. Plenty of creativity occurs within the technology industry, and without patents, executives say they could never justify spending fortunes on new products.”. But patents need to be clear and not for every single little things. In fact, like says Charles Duhigg and Steve Lohr in an article published in the NY Times on October 2012: “some patents are so broad that they allow patent holders to claim sweeping ownership of seemingly unrelated products built by others. Often, companies are sued for violating patents they never knew existed or never dreamed might apply to their creations, at a cost shouldered by consumers in the form of higher prices and fewer choices.” And finally a public intervention could be useful to improve functioning of the market but we need to be careful too. In some case public intervention could have the reversed effect. In my opinion, I’m for a public intervention but a specific one and discrete. And other problem I would like to highlight is about the harmonization of patents rule between countries. I find sometime legislation complex to know exactly which law we should take into account. The absence of clarify could encourage firm to derive from good practises in market of technologies. Show less Reply Coeck Chesley 28 September 2015 Intellectual Proprieties law has an important economic role in our life today. More and more firms use patents so they can stay competitive and reduce their costs. As said in the article, the “division of labor” consists in a division between applying and producing, specializing in the production of new knowledge has a number of positive effects in the economic…Read moreIntellectual Proprieties law has an important economic role in our life today. More and more firms use patents so they can stay competitive and reduce their costs. As said in the article, the “division of labor” consists in a division between applying and producing, specializing in the production of new knowledge has a number of positive effects in the economic world, as listed by Pluvia-Zuniga and Guellec (2009). This is based on licensing agreement allowing firms (like in pharmaceutical industry) to proceed a vertical separation with upstream firms which are specialized in the creation of new knowledge and downstream firms which are buying and applying this knowledge. However, the Intellectual Proprieties brings some difficulties for some firms: “[…], the development of a market for technology is not an automatic outcome. It depends not only on the efficacy of technology licensing contracts […], but also on the industry structure itself.” (Arora and Fosfuri).Indeed, firms could have difficulties to stay competitive due to their size, having more difficulties to find partners and license their patents: “The relationship between size of the firm and probability to license out is U-shaped: small firms and large firms are more likely to license out their patented inventions. In Europe, SMEs have more difficulties to license out their patents than large firms. The major barrier to licensing out patent markets is informational (identifying partners). Finally, we also find that more than one third of young European firms (born after 2000) deem patents as quite or very important to convince private investors and venture capitalists to provide them with funds” (Pluvia-Zuninga and Guellec 2009). The fact is that it takes a long time to reach some agreements with the partners, but this time is crucial for small companies to keep the head above the water. This is why some public intervention is important for small companies which need some help to enjoy economies of scale reserved for larger firms, thanks to the clustering for example:” Clustering is the phenomenon whereby firms from the same industry gather together in close proximity […] one of the most famous clusters is that of the Hollywood film industry. When the big movie studio system broke up in the 1930s it fractured into a large number of what were essentially small specialist firms and freelancers. Clustering around Hollywood allows each of these small units to benefit as if it had the scale of an old movie studio, but without the rigidities of the studios’ wage hierarchy and unionized labor.” (The economist). To sum up, we can say that there exists a link between the licensing of patent and the cluster having a huge impact on the market. Indeed, a small firm which have a smaller R&D department will have more difficulties to find partners and so be more competitive to the other firms by reducing its costs for example. Furthermore, for a start-up which want to enter the market and be competitive, it will very difficult to make a place with such big competitors on its own. It will need some support by some public intervention (clustering) bringing the opportunity to the firms to collide rather than act individually. The licensing of patent will reduce the constant marginal cost of production, allowing the firms to be more competitive, but reducing the total profit of the firms which is not always a good thing. Finally, to answer the question: do the markets for technologies really work? , it is important to thing about all the possible consequences of introducing and licensing new patents affecting the market. References: ARORA, A., & FOSFURI, A. (2000). The Market for Technology in the Chemical Industry: Causes and Consequences, Vol.92, pp. 317-334 GUELLEC, D., & PLUVIA ZUNIGA, M. (2009). Who licenses out patents and why? Lessons from a business survey. Statistical Analysis of Science, Technology and Industry http://www.economist.com/node/14292202 Show less Reply Séverine Mousset 28 September 2015 As explained in this article, the IP law gives two types of right to the patent holder : the exclusive and the transferable rights. The first one allows the holder to earn money from his innovation by preventing other companies to take advantage of its innovation to make money. The goal of this law is that the owner can be rewarded…Read moreAs explained in this article, the IP law gives two types of right to the patent holder : the exclusive and the transferable rights. The first one allows the holder to earn money from his innovation by preventing other companies to take advantage of its innovation to make money. The goal of this law is that the owner can be rewarded for his research efforts on the innovation and it makes a profit that will allow him to do further research to innovate again. The second law allows to give a license to a second part which can have access to the patented technology to improve it or develop it for another use. With this license, the patent owner retains ownership of the technology and the holder of the license supports the development of this patented technology. This transferability right allows a better scientific and technological development thanks to better collaboration between different specialists working together on the patented technology. This collaboration allows great advances in the field of science, but also allows companies to keep a competitive advantage against other companies in the targeted economic market. Furthermore, the license allows the vertically division of labor. Indeed, the company that has received a patent for a technology named X may delegate his work to another company by the license. The upstream company that has obtained the patent will work on a new technology named Y, and the downstream company that has obtained the license will develop more in-depth the technology X patented by the upstream company. This vertical division system allows a better allocation of resources. Indeed, only the downstream company will spend time and money on technology X while the upstream company will devote all these R&D for the new technology Y. By working like this, there will be no more R&D duplication. In my view, patents and licenses are essential to the development of new technologies. On the one hand, patents are used to motivate companies to do research to find new technologies and to innovate. On the other hand, the licenses allow a better allocation of resources. Indeed, some companies (upstream) will focus on research into new technologies while other companies (downstream) will focus on the development of existing technologies. Both types of firms innovate because the upstream companies are looking for new technologies while the downstream companies improve the existing technologies and find new uses for these existing technologies. For economic and scientific developments, patents and licenses are, I am sure of it, of major importance. References : http://www.wipo.int/patent-law/en/developments/licensing.html http://smallbusiness.chron.com/definitions-upstream-downstream-production-process-30971.html https://en.wikipedia.org/wiki/Vertical_integration http://firstmonday.org/ojs/index.php/fm/article/view/1903/1785 Show less Reply Laureen de Barsy 27 September 2015 As stated in Professor Belleflamme’s post, trade between firms producing knowledge and firms using it in production is complicated by high transaction costs and uncertainty concerning the patent value. Since interventions aiming at reducing trading costs have already been covered in previous posts, I will focus on instruments that may increase trade in patents by reducing uncertainty. Akerlof (1970) has illustrated…Read moreAs stated in Professor Belleflamme’s post, trade between firms producing knowledge and firms using it in production is complicated by high transaction costs and uncertainty concerning the patent value. Since interventions aiming at reducing trading costs have already been covered in previous posts, I will focus on instruments that may increase trade in patents by reducing uncertainty. Akerlof (1970) has illustrated in his article “The Market for Lemons” why uncertainty concerning the quality of a product-market can reduce the number of transactions in this market. This article’s conclusions can be applied to knowledge, whose value is difficult to determine due for instance to its novelty (Troy and Werle, 2008) and secrecy (Ménière, 2011). So, such as for cars in the example given by Akerlof, reducing uncertainty in the technologies market will increase knowledge transactions. This has been empirically tested by Jensen, Palangkaraya and Webster (2015) who show that firms having a prior relationship (thus reducing uncertainty) have a higher probability to conclude technology rights transactions. There are two steps in reducing uncertainty concerning the quality of a technology. • First, we need to assess whether the technology constitutes a real innovation, giving a competitive advantage to its owner. • Second, we need to measure the value of the right to use this innovation. The first step is the domain of patent offices (the most important being the EPO for the EU and the USPTO for the US). The role of these offices is to grant patents. To do so, they follow patentability criterion (Ménière, 2011) guaranteeing the quality of the technology patented. The second step of assessing the patent value is trickier. Recently, several institutions, both private and public, have offered to solve the lack of measurement: • In the private category, Ocean Tomo, a market place for patent transactions, bases its patent value index on the owner’s willingness to pay for the maintenance of the patent. (Sipress, 2007) • In the public category, the European Patent Office (EPO) has developed a statistical patent rating method. This method consists in indentifying characteristics of intrinsically high-valued patents (e.g. successfully litigated), and using them to construct algorithms or models that will predict the value of a patent depending on its characteristics. (Barney and Barney, 2003) References: AKERLOF, G. The Market for “Lemons” : Quality Uncertainty and the Market Mechanism. Quarterly Journal of Economics, vol. 84, no 3, 1970, p. 488-500 BARNEY, JA ; BARNEY, JR. Method and system for rating patents and other intangible assets. European Patent Office, US 6556992, 2003. Retrieved from http://worldwide.espacenet.com/publicationDetails/biblio?CC=US&NR=6556992&KC=&FT=E&locale=en_EP JENSEN, PH; PALANGKARAYA, A; WEBSTER, E. Trust and the Market for Technology. Research Policy. 44, 2, 340-356, Mar. 2015. KAPOOR, R; KARVONEN, M; KASSI, T. Patent Value Indicators as Proxy for Commercial Value of Inventions. International Journal of Intellectual Property Management. 6, 3, 217-232, 2013. MENIERE, Y. Vers une bourse des brevets ? IPdigIT, 2011. Retrived from http://www.ipdigit.eu/2011/02/vers-une-bourse-des-brevets/ SIPRESS, A. Ocean Tomo Catches the Wave in Valuing Intellectual Property. The Washington Post Company, May 2007. TROY, I; WERLE, R. Uncertainty and the Market for Patents. MPIfG Working Paper 08 / 2. Max-Planck-Institut für Gesellschaftsforschung, Köln, 2008. Show less Reply Nathan Lassance 27 September 2015 As the content of this article quite extensively recalls, the licensing of patents is very desirable for society. Without going back on all arguments, it allows to have a market for technology and thus a greater incentive for innovation since innovators have more means of getting sufficient return from their R&D investments. Moreover, in high-tech industries, licensing has led to…Read moreAs the content of this article quite extensively recalls, the licensing of patents is very desirable for society. Without going back on all arguments, it allows to have a market for technology and thus a greater incentive for innovation since innovators have more means of getting sufficient return from their R&D investments. Moreover, in high-tech industries, licensing has led to a vertical separation: the firms producing new knowledge and those applying this knowledge are no longer the same. Pluvia-Zuniga and Guellec (2009) hold five positive economic effects coming from this trend. Overall, the same authors found that the two main motivations to license is first earning revenue and second sharing the technology with outside firms (especially when network externalities are substantial). However, the markets for technology are far from being efficient. One of the main reasons is simply that firms face difficulties to find partners. As Pluvia-Zuniga and Guellec (2009) meaningfully conclude from their business survey: “About 24% of firms in Europe declare having patents that they would be willing to license out but could not (53% of firms in Japan). The figures are higher within licensing companies and still higher among small firms. The major reason for this failure, according to the European and Japanese surveys, is the difficulty in identifying a partner.” Troy and Werle (2008) also found, in their qualitative survey on more than 9000 European patents, that only 13.4% of these patents have been used for licensing. They also describe the reasons for this market inefficiency. For them, this is linked with the inherent uncertainties involved with patent trading, regarding the demand or the value of the patent, which are nearly unpredictable. Finally, as explained by the World Intellectual Property Organization: “Technology licensing negotiations […] have sides whose interests are different, but must coincide in some ways.” The negotiation is often a blundersome process that requires a lot of time and involves high transaction costs. These inefficiencies of licensing contracts, as explained by Arora and Fosfuri (2003), reduce the revenue effect for the licensor and therefore lead to less licensing. Given all this, policy intervention seems objectively necessary to increase the number of licenses granted and make the market for technology more effective. After having conducted some research, I have decided to describe one specific type of policy which is the support of business clusters. According to Wikipedia, a business cluster is “a geographic concentration of interconnected businesses, suppliers, and associated institutions in a particular field”. One worldwide known business cluster is in Silicon Valley in California where we can find a very high concentration of (high)tech start-ups. These clusters create close relationships and collaboration, as well as little distance between firms. In my opinion, investing in such clusters to make them develop and grow could be one effective way of reducing the transaction costs involved with licensing, as well as making the quest of finding a buyer easier. I have therefore investigated if such initiatives do exist. And I didn’t have to look very far: Wallonia has put in place a financing program of business clusters. In 2007, a Decree was released in the frame of which the government can grant a subsidy to a business cluster that “either develops a partnership with a view to its participation in an international co-operation programme or concludes a co-operation agreement between business clusters in order to carry out a specific task, including on an international scale.” This subsidy can raise up to 160,000€ yearly. As one can see, the international aspect of the cooperation projects is very important to be granted a subsidy. That seems indeed to be a promising way of increasing the number of international partnerships with Belgian firms, and thus to help finding partners with who they could share their technology. I will conclude by saying that, even though increasing licensing of patents is desirable for society and therefore that initiatives such as the support of business clusters is to be viewed positively, the repercussions on the industry are more ambiguous. Arora and Fosfuri (2002) explain, in a framework of multiple licensors, that reduced transaction costs of licensing induces each technology holder to privately license more. However, licensing induces entry in the market and increases competition, and therefore reduces the total profit of the firms. As a result, the licensors would have serious incentives to collide rather than act independently, reduce licensing and increase profits, which, from a social welfare point of view, is not desirable. Decreasing the transaction costs of licensing can thus be detrimental to the diffusion of technology! Policy makers should assess as much as possible all the potential positive and negative effects before taking a decision on the subject, as well as understand how the incentives of licensing are formed. References: ARORA, A., & FOSFURI, A. (2002). Licensing the market for technology. Journal of Economic Behavior & Organization, Vol.52, pp. 277-295 GUELLEC, D., & PLUVIA ZUNIGA, M. (2009). Who licenses out patents and why? Lessons from a business survey. Statistical Analysis of Science, Technology and Industry. http://www.oecd.org/science/inno/42477187.pdf TROY, I., & WERLE, R. (2008). Uncertainty and the Market for Patents. MPIfG Working Paper. http://www.mpifg.de/pu/workpap/wp08-2.pdf World Intellectual Property Organization. (2004). Successful Technology Licensing. IP Assets Management Series. http://www.wipo.int/edocs/pubdocs/en/licensing/903/wipo_pub_903.pdf https://en.wikipedia.org/wiki/Business_cluster http://clusters.wallonie.be/federateur-en/financement.html?IDC=346 Show less Reply Sebastian Ksiezopolski 9 December 2014 Market of intellectual property does not always work as efficiently as the society could wish. Transfer of the technological developments can be beneficial to the economy, but it is often difficult to exchange the intellectual rights due to regulations, uncertainty and flaws in market functioning. Therefore, it might be reasonable to create central mechanisms facilitated by the government to help…Read moreMarket of intellectual property does not always work as efficiently as the society could wish. Transfer of the technological developments can be beneficial to the economy, but it is often difficult to exchange the intellectual rights due to regulations, uncertainty and flaws in market functioning. Therefore, it might be reasonable to create central mechanisms facilitated by the government to help this market to be more efficient. This intervention can happen through numerous ways. First of them is to buy out the technology available on the market and then allow free use of it. Selling of the technology that is crucial for social welfare to the government agency may be compulsory for the inventor. However, this approach may reduce the incentive for innovators as government deals may be not profitable enough. Another way might be to introduce a prize for certain key technological advancement. Government agency may also fund the research and the outcome would be a part of public domain. It is important to note that the approach with government intervention at its center has also some flaws. The major problem is that government needs to decide about the target of the research and pick the winner. The winning one might be the prize recipient or the organization which will conduct the research. Central decisions do not have to be more optimal for public welfare than outcome of standard market competition. One of the examples of successful government-funded research is Human Genome Project. The project was officially started in 1990 and declared complete in 2003. It was proposed and funded by the US government, but other parties also contributed financially. Research was conducted by 20 universities and research centers in the US and other countries. Interestingly, in 1998 the private genome project was launched by the company Celera Genomics. This project was intended to progress faster than the government one while being 10 times cheaper. Celera Genomics intended to patent its findings unlike the government agency. After making it clear by the US government that patenting of human genome would be impossible, stock price of Celera plummeted and the results were eventually published in academic journals. Another interesting idea is Digital Copyright Exchange that was proposed in the United Kingdom. The idea was to create efficient market for buyers and sellers of intellectual property to make the exchange easier for both sides. I believe that government’s intervention may be beneficial for the social welfare. However, we should bear in mind that the central decision does not have to be the most reasonable one and that these projects would be a cost for the citizens as a tax. Probably governments should focus on helping the market to function properly and intervene directly only rarely in truly crucial areas or unusual, difficult situations. Show less Reply Maxime Verheggen 9 December 2014 There is some essential isues with technologies markets. Such as, if sellers can't find buyers and vice versa. That will be not efficient. And could lead to a slowind down pace of innovation's novelties. In order to avoid that problems European Union set up a tool for entreprises helping them to meet potential partners. The Entreprise Europe Network links companies…Read moreThere is some essential isues with technologies markets. Such as, if sellers can’t find buyers and vice versa. That will be not efficient. And could lead to a slowind down pace of innovation’s novelties. In order to avoid that problems European Union set up a tool for entreprises helping them to meet potential partners. The Entreprise Europe Network links companies to share their knowledge and to source technologies. This tools solve also the problem of the price and the transaction cost due to a lack of information. Another Issue is the absence of transparency on the technologies markets. Indeed, innovative ventures cannot know if there is already the same innovation in the queue, waiting to be patenting. It creates waste of time and dupplicates innovative researchs. A solution could be a register which you can easely access and where you have all the potential patents awaiting. So innoventive ventures will be clearly aware of what has already done. To finish , the authorities could standardize the procedures of the contracts to make easier the deal between owners and buyers. Common and clearly rules will likely prevent from derive and abuse. Source: http://een.ec.europa.eu Show less Reply Copay 9 December 2014 Access and use of the existing knowledge require dedicated activities that entail costs (ie. absorption costs and exploitation costs). Dedicated interactions among agents are necessary to make the transformation of new scientific knowledge into technological knowledge possible (the use of knowledge requires costly learning and adaptation to a specific context of application). The quality of communication channels and the context…Read moreAccess and use of the existing knowledge require dedicated activities that entail costs (ie. absorption costs and exploitation costs). Dedicated interactions among agents are necessary to make the transformation of new scientific knowledge into technological knowledge possible (the use of knowledge requires costly learning and adaptation to a specific context of application). The quality of communication channels and the context in which user-producer interactions take place exert a key role (Antonelli, 2013). The lower the cost of access and use of existing knowledge will be for the firms, the bigger the economic progress. This depends on the quality of user-producer interaction and communication and can be improved by public authorities (Antonelli, 2013). In their paper of 2012, “Options for an EU instrument for patent valorisation”, the experts described the term “patent valorisation” as “the action of creating value from patents by capturing and extracting their latent economic potential through developing and commercialising the underlying technology”. They stress that the patent valorisation through technology commercialisation is subject to market failures because of large transaction costs. Indeed, costs comes from the screening cost of finding potential buyers/sellers, the information cost of agreeing on a valuation of the technology, the negotiation cost of organising the transfer of related know how, and the aggregation cost of obtaining freedom to operate on all the patents that cover a given technology (Menière, 2012). I will develop my reflexion on three instruments that have been considered for the European Union in order to improve patent valorisation: namely IPR exchange platforms, Services to enhance patent valorisation and Services to enhance patent valorisation. This would be beneficial to innovation and knowledge diffusion. Gains from trade of patents and licenses allow for a more efficient division of labour and a more extensive use of patented technologies. In the long term, the aim is to generate additional investment in R&D. First, IPR exchange platforms aim to facilitate the matching process between potential sellers and acquirers by centralizing information on available patents and/or buyer needs on web-based repositories (Menière, 2012). This could reduce the screening costs and therefore transaction costs. However, the information need to be clear and complemented a large range of side-services in order to provide effective impact on transactions. Large companies may have an advantage over SMEs. The seconds lack of large resources and information that the firsts have. It is important that Europe provide good quality expert consultants services to SMEs in order to allow them to effectively use these platforms. Second, services to enhance patent valorisation such as standardised tools (e.g. guidelines, checklists) or consultant advice in order to reducing screening, information, and/or negotiation costs could improve the valorisation process (Menière, 2012). To go further, European companies should also coordinate national initiatives, promote best practices, and set up local services. Third, patent funds could be developed in order to reduce transaction costs through specialisation and economies of scale. In addition, this could help to support the cost of technology maturation, and to hedge the risks of commercialisation (Menière, 2012). Patent funds invest in the acquisition of titles to patents from third parties, in view of achieving a return by monetising these patents through their sale, licensing or litigation (Menière, 2012). The patent acquisition process should be driven by market experts based on the demand-side of the market. Caution has to be taken because in order to allow a successful commercialisation, the fund has to be able to support the maturation of high potential technology until proof of concept. In 2012, the Expert Group considered two policy options related to patent funds: the creation of a European Patent Licensing Fund based or the provision limited and targeted financial support to the creation of patent pools for selected technologies. They considered that such pools could be effective instruments to reduce transaction costs in high potential technology fields where key enabling technologies are covered by a large number of patents, with limited risks of commercial failure. For the comment of policy measures, I choosed to speak about the different helpdesk have been implemented (for example: MERCOSUR IPR SME Helpdesk , The China IPR SME Helpdesk supports EU SMEs, ASEAN IPR helpdesk) These IPR SME Helpdesks facilitate the expansion of the SMEs which are interested in or already operating in theses regions. The aim is to increase know-how of the usage and enforcement of the Intellectual Property (IP) rights system. Lots of services are free of charge, user-friendly, and services can concern the form of jargon-free, confidential advice on IP and related issues, as well as training, materials and online resources. The China IPR SME Helpdesk project is funded by the European Commission’s Directorate-General for Enterprise and Industry under the Competitiveness and Innovation Framework Programme (CIP). The Helpdesk arranges training on China IPR protection and enforcement in Europe and China. The ASEAN IPR provides Helpdesk Country Factsheets with an overview of key IP considerations for each ASEAN nation. Helpdesk Business tools are produced to give practical advice on how to develop and implement an effective IP strategy in ASEAN regions. They provide Guides, E-learning modules, Case Studies, Videos and Webinars to download for free. All these plateforms are interesting instruments to reduce the screening costs which, are important type of transaction costs in patent valorisation. However, additional in-depth skills and expertise are certainly necessary in order to commercialise patented technology. There are still desavantage of SMEs compared to large firms. The latter can benefit from local implementation of consultants, which is an advantage to detect opportunities, offer adequate advice and services. In order to be more efficient, effective support to patent valorisation by SMEs could also include financial support to the development of technology prototypes (Menière, 2012). References and sources: Cristiano Antonelli (2013) “Knowledge Governance,” Economic Development Quarterly, , vol. 27(1), pages 62-70 Yann Menière, (2012) Options for an EU instrument for patent valorisation, European Union, Expert group on IPR valorisation, ISBN 978-92-79-22142-2, doi:10.2769/31035 http://ec.europa.eu/enterprise/policies/innovation/files/options-eu-instrument-patent-valorisation_en.pdf http://www.china-iprhelpdesk.eu/en http://www.asean-iprhelpdesk.eu/#sthash.sjP1VOcM.dpuf http://www.mercosur-iprhelpdesk.eu/content/services Show less Reply Platiau Sylvain 9 December 2014 I think that a good example to improve the market of technologies is given by the history. It is the decision of UK when the country joins the EEC to harmonize norms of patent rights. Actually, the length of patent rights were not the same in UK than in the EEC. It lasts 16 years in the UK and 20…Read moreI think that a good example to improve the market of technologies is given by the history. It is the decision of UK when the country joins the EEC to harmonize norms of patent rights. Actually, the length of patent rights were not the same in UK than in the EEC. It lasts 16 years in the UK and 20 in EEC. So the old patents were prolonged of 4 years. During these 4 additionnaly years, the patent was “transformed” in a licence of right.The dechnology protected is so available for everyone who want to use it but it provides an income to the innovator and clearly protect the incentive to innovate in research for new technologies. In case of failure of negotiations, a controller of patents (Intellectual Property Office of UK ?) sets the conditions of the licence. What I think is that a such “Patent Office” and the decisions it can take are good for the market of technologies. Actually, I think if all intellectuel properties (for technologies, not art, design etc.) were licences, the market would be improved. Effectively, with this type of maket, the incentive to innovate is protected and the concurrence between licensee and innovator can be effective on the market of goods. And more, with this type of institution, dominant position abuse can possibly be prevent (by not according licences to concurrents). Show less Reply Virág Dezső 9 December 2014 Firms have typically tried to profit from their technical innovations by selling them indirectly, embedded in goods and services. Markets for technology, in which innovations are sold or licensed, have been much rarer. Yet, trade in technology has grown systematically over the past 20 years, as reflected in the growth of arrangements such as licensing agreements, R&D joint ventures, and…Read moreFirms have typically tried to profit from their technical innovations by selling them indirectly, embedded in goods and services. Markets for technology, in which innovations are sold or licensed, have been much rarer. Yet, trade in technology has grown systematically over the past 20 years, as reflected in the growth of arrangements such as licensing agreements, R&D joint ventures, and contract R&D. Recent estimates indicate that royalties received by American corporations for industrial processes may amount to about a quarter of total U.S. R&D. A number of supporting institutions that facilitate effective dissemination of information, standardization, and contracting are vital to the rise and functioning of markets for technology. Intellectual property rights, and in particular patents, are one such institution. Patents facilitate the development of markets for technology in several ways: They enhance the ability of the licensor to extract rents from its innovation; they reduce costs in technology trade by forcing an increased codification of knowledge; they reduce information asymmetries, opportunistic behaviors, and transaction costs. However, there are some potential costs of stronger patents, including litigation costs and the problem of “anti-commons.” Public authorities who choose to implement interventions may have different targets. From this point of view, two types of mechanism can be envisaged by public authorities: consumption subsidies and production subsidies. Production subsidies can be defined as reducing “the cost of producing the service by fro example reducing the cost of labour or operating. On the other hand, consumption subsidies “promote an increase in the consumption of specific goods or services by increasing consumers’ purchasing power or by reducing the price of these goods and services”. It is interesting to stress that traditionally, the social sphere tends to subsidize the supply and not the demand. Regarding to the asked examples I can say that KU Leuven Research & Development entity and Louvain-la-Neuve Science Park are good examples that can show how efficiently they can use licensing agreements. Show less Reply Gonçalo Ciravegna da Fonseca 9 December 2014 The market for technologies has several economic benefits, however there are some requirements that must be fulfilled to a profitable operation. On one hand, the economic consequences of the market for technologies include the diffusion of innovation, specialization and reduction of transaction costs. On the other hand, some requirements must be followed in order to make this market profitable. As the…Read moreThe market for technologies has several economic benefits, however there are some requirements that must be fulfilled to a profitable operation. On one hand, the economic consequences of the market for technologies include the diffusion of innovation, specialization and reduction of transaction costs. On the other hand, some requirements must be followed in order to make this market profitable. As the text pointed, in this market there is the need to have both buyers and sellers interested because large costs are wasted during the negotiating process due to the fact that there is an information asymmetry. So, in order to improve the functioning of this market, public interventions must be provided. These interventions must ensure that all information about patents is provided to both parts involved. In my opinion, in the market for technologies there is the need for an intermediary process that allows stakeholders to communicate in an efficient way. This process should reach the goals of both sides of the market and, as a consequence, will reduce transaction costs. As an example, an exchange platform for Intellectual Property rights could be created in order to facilitate the interchange process as it provides all the information (centralized). Regarding real world examples concerning this market, based on the “European Commission recommendation on the management of Intellectual Property”, we can say that there are two different mechanisms to regulate the market, such as a recommendation to the members and two codes of practise. This instruments can be described as guides to improve the efficiency of the market. To sum up, I consider that public interventions should be stimulated in order to increase the efficiency and profit of IP markets. Sources: http://spp.oxfordjournals.org/content/30/1/4.abstract https://www.google.pt/?gws_rd=ssl#q=technology+public+intervention Show less Reply Ricardo Carvalho 9 December 2014 As in any market, the technology market has inefficiencies, that keep it from generation as much social welfare as it would be possible. This has to do with several facts about how the market works, namely the interaction between firms. One of the most important facts that we discussed, however, was how litigation can be a factor that prevents the…Read moreAs in any market, the technology market has inefficiencies, that keep it from generation as much social welfare as it would be possible. This has to do with several facts about how the market works, namely the interaction between firms. One of the most important facts that we discussed, however, was how litigation can be a factor that prevents the market from working well, by dragging firms in expensive processes that are not clear, and can even some times hurt the innovative process, by creating defensive behaviours by companies, namely by an excessive behaviour in filing for patents. I believe that litigation is one of the most interesting causes for loss of efficiency in the market, since it is obvious that in an ideal, efficient market, disputes would be solved instantly, and with an ever fair outcome, although this is an expectation that would belong in an utopia. So I would like to approach one of the most famous litigation cases in recent memory: Samsung vs Apple. At a certain point throughout the process, an U.S. trade court favoured Samsung, in that would deny the import of some Apple phones and tablets, a decision that was faced as harsh for some (although both companies urged the court to ban it’s competitor’s products from commercialisation, the process was mostly solved through mandated monetary compensation to the other party). Following this decision, the White House intervened by overruling this verdict, in fear that it could hurt the U.S. economy, both by stopping tax from consumption of these products, as well as that resulting from corporate profits. By making this decision, the White House gave a big signal of what it thinks that the policy for future litigation should be: the decisions resulting from litigation shouldn’t be destructive to the point where they not only affect the losing company, but also the tech market and economy as a whole. While many argue that this move may have favoured Apple in a nationalistic biased way, one thing is sure: consumer surplus was protected by this measure, since no person was prevented from buying their desired products due to what was happening in a court. However these cases are handled in the future, one thing is clear: If there are limits in what the courts can decide, and if these limits favour the consumers choice, there will be a stronger incentive for innovation and creating new products, since even though they can get penalties of other kinds (at a certain point, Samsung was ordered to pay over one billion dollars as a result of litigation with Apple), companies will be healthier in the long term, allowing for more freedom to keep their products safer from courts. So while litigation can still have a negative effect on the producer side, the consumer side is somewhat protected. Sources: http://techonomy.com/2013/08/white-house-intervention-in-apple-patent-case-sets-bold-precedent/ Show less Reply Keuller Dorian 9 December 2014 Following the courses, laws on IP increase the incentive to develop a market for technologies because that allows exclusivity and transferability of intellectual properties. Firstly, exclusive rights ensure that innovators get the adequate return from their innovations. Secondly, transferability allows the innovators to get the maximum profit due to his intangible asset. However, high uncertainty in trading leads to…Read moreFollowing the courses, laws on IP increase the incentive to develop a market for technologies because that allows exclusivity and transferability of intellectual properties. Firstly, exclusive rights ensure that innovators get the adequate return from their innovations. Secondly, transferability allows the innovators to get the maximum profit due to his intangible asset. However, high uncertainty in trading leads to high transaction costs which prevent an efficient market. Moreover, the current patent system impeded these innovations because it does not scale with experience. So there is no advantage by buying for the 100th time. Secondly, there is the problem of “the valuation of patents” which is one of the bigger problem in this sector. Indeed, because there are no procedures to measure the value of IP and because there is no obligation to disclose the IP, some companies will prefer to hide IP to the public in order to avoid concurrency. This situation has to be solved to increase the incentive to innovate. Did the public authorities have to make interventions on this market? And how did they have to do? Since this technology market is quite locked by these problems, solutions have to be found. Firstly, about the transaction costs, the the coase theorem is the first thing I had on my mind. It says that in absence of transaction costs, and if IP are well-define, it will result in an efficient allocation. Thus, maybe the authorities should work in order to try to decrease these transaction cost. But how could they do that? Following “meso-nrw” website, there are different ways for governments to reduce transactions cost. Firstly, to be in an effective and efficient legal system will reduce transaction cost because it will decrease the uncertainty of procedures, or the fear to reveal his IP due to a lack of rules on the valuation of patent. Thus maybe some institutions could be created in an international point of view to create laws about “patents valuations”. Companies will have more incentive to disclosure their IP to make accurate valuation and to earn to fair return. Secondly, another solution (illustrated later by “Asia intervention”) could be to integrate IP into public education. It will increase the IP awareness across society in general and moreover it will create a generation where the share of knowledge is logic. And finally, a system of “tax incentive” could be made in order to increase the incentive of companies of sharing their knowledge. Always in the same way, but in my meaning this time, a system with subside in R&D could be created. I mean that the government could give some subsidies to firms but only if they are invested in Research & Development. For that, as told in last week discussion on the smartphone patent wars, it’s very important to create common international laws. To illustrate these solutions the case of “ASIA” is perfect. Following the “Asia drives the transformation of the global patent economy” article, it seems that Asian governments have taken several common steps in developing their innovative competences. Firstly they have, after they joined IP institutions and legal conventions (such as the World Intellectual Property Organization (WIPO), the PCT and the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs), they have established dedicated Intellectual Property High Court in 2005 which granted several courts competence over specific domains. When a legal system that conformed to international norms had been established, the focus shifted to judicial enforcement of that system. These first solutions are in line with our expected solutions. Secondly, as explained before, national authorities have try to promote the innovative skills at school. In order to train people to think in an innovative way, to make the word “innovation” become their leitmotiv. They have done that in order to increase the share of knowledge, the investment in R&D, and to improve patent quality. Across Asia, the politics want to encourage innovation and it has reached new heights, and this is often recognized as a core policy goal. Finally, to conclude this example we could say that Japan, Korea, Taiwan and China have reinforced their legal and juridical frameworks, and ramped up public investment in research and education, thus making IP a principal lever of national economic growth. To conclude, in my meaning, authorities have to be involved in this technologic market because like every new markets, it has to be optimized, common standards have to be create to ease such sharing of knowledge and to ensure the fair returns for innovators from their inventions. The best solution and the most applicable one for me is to implement tax incentive system and subsidies. -http://www.meso-nrw.de/toolkit/tools/tools-costs-analysis-2.html -http://www.athenaalliance.org/weblog/archives/2014/11/new-study-on-patent-licensing-costs.html -Miyuki Monroig and Patrick Terroir, “Asia drives the transformation of global patent economy”, IAM, July 2013 on http://www.innovation-economie.com/ -http://www.rpxcorp.com/ -http://fr.wikipedia.org/wiki/Th%C3%A9or%C3%A8me_de_Coase -http://www.minfin.fgov.be/portail2/belinvest/downloads/en/publications/bro_r_and_d.pdf -http://en.wikipedia.org/wiki/Tax_incentive Show less Reply Ankit Khandelwal 9 December 2014 Market failure can be described as a situation when the allocation of resources by a free market is not efficient. There are several reasons to market failure which call for public interventions. These can be in the form of providing incentives from the government or tackling structural changes. The problem that can be attributed to market failure for patent markets…Read moreMarket failure can be described as a situation when the allocation of resources by a free market is not efficient. There are several reasons to market failure which call for public interventions. These can be in the form of providing incentives from the government or tackling structural changes. The problem that can be attributed to market failure for patent markets could be information asymmetry and externalities. The innovator has much more knowledge about the product and the buyer would be at a disadvantage. Transaction and searching costs are other problems elated to market failure for patents. The government can intervene in several ways. For removing static inefficiencies from the market, the government can introduce subsidies. This is often the case in pharmaceutical markets in developing countries like India. A common problem which seems to arise due to patent laws is excessive filings of patents. This could increase costs for searching the desired patent. Government can reduce such excessive filings by raising fees. The US Patent and Trademark Office (USPTO) and the EPO have recently changed their fee structures and rules regarding screening of applications. Structural problem can be tackled by proper maintenance of records. Companies can also outsource the work to general public, popularly known as crowd-sourcing. This even saves litigation costs and the method has been adapted by EPO and USPTO by developing a peer-to-peer system. In the US in 2011, The Leahy-Smith Investment Act was passed to reduce litigation costs and make patent filings easy electronically. In some countries government are creating patent funds, like financial funds. These funds manage patents and earn money through security interest and sale. Examples include Korea, France, and Japan. The UK government has recently thought of creating an online digital copyright exchange to bring owners and purchasers with more ease. It seems that government or public intervention can help mitigate the problems described above. But at the same time these policies could bring in other kind of inefficiencies through market distortions. Private sector seldom resonates with the views of the policy framing institutions. A common dialogue by placing everyone’s interest on the table can help go a long way References: Supporting Investment in Knowledge Capital, Growth and Innovation (OECD) Show less Reply leonce mpawineza 9 December 2014 Inventions which are patented usually have transferable rights that makes it possible of their purchase and sale. This has led to the formation of markets technology markets in the modern economy whereby companies like Microsoft, IBM etc are making billions of money from the sale/rent of their patent thickets. At the industry level market for technology can lower barriers to…Read moreInventions which are patented usually have transferable rights that makes it possible of their purchase and sale. This has led to the formation of markets technology markets in the modern economy whereby companies like Microsoft, IBM etc are making billions of money from the sale/rent of their patent thickets. At the industry level market for technology can lower barriers to entry (entrants can use the existing technology to lower production costs) or promote competition.However intervention by responsible bodies is needed to prevent the abuse of this rights and improve the efficiency of this markets. The EU in its Innovation Union Communication outlining a medium term strategy for innovation in Europe includes an action aiming at improving the economic exploitation of Intellectual Property Rights (IPR). Action 22 in 2011, the Commission made a proposals to develop a European knowledge market for patents and licensing. This was intended to build on Member States experience in trading platforms that match supply and demand, marketplaces to enable financial investments in intangible assets, and other ideas for breathing new life into neglected intellectual property, such as patent pools and innovation brokering”. In the Conclusions of its meeting on 4th February 2011 , the European Council invited the Commission to “explore options for setting up an intellectual property rights valorisation instrument at the European level, in particular to ease SMEs’ access to the knowledge market, and to report back to the Council by the end of 2011”. We can conclude that the market for technology works but needs more intervention by antitrust authorities in order to regularize the functioning of this markets. this will make firms put more incentives in R&B,especially research labs for they will be guaranteed of recouping their investments in this activities. Major fields that show much presence of this technology markets are chemical,biotechnology,software,computer and electrical fields. References European commission-enterprise and industry-intellectual property Markert for technology and their implication on corporate strategy- Oxford Journal Show less Reply Ana Martínez Alcaraz 9 December 2014 When 17,4% of the patent remain unused without any strategic motive, it is obvious that the market for technologies is not working properly. Even when the sellers find potential buyers, sometimes appear irreconcilable differences between the parties. In 2005, the Licensing Foundation of LES made a survey that shows that the most important motives because the licensing negotiation do not reach…Read moreWhen 17,4% of the patent remain unused without any strategic motive, it is obvious that the market for technologies is not working properly. Even when the sellers find potential buyers, sometimes appear irreconcilable differences between the parties. In 2005, the Licensing Foundation of LES made a survey that shows that the most important motives because the licensing negotiation do not reach an agreement are the inability to reach mutually acceptable financial terms (30,9%) and non-financial terms (24,6%). These high percentages reveal a problem of asymmetric information that could be solved with policies which increase the transparency of the marketplace. This could be made by an improvement of the information provided by the patent office about the patent characteristics. Another obstacle for licensing are the large transaction costs that implies trying to reach an agreement. Public institutions could diminish the negative impact of this enacting the standardization of the process and contracts, facilitating and cheapening the way to a satisfactory agreement between licensor and licensee. Source: https://faculty.fuqua.duke.edu/~charlesw/s591/Bocconi-Duke/Bocconi/S2_2008_02_11_MFT/Cockburn_-_Is_the_Market_for_Technology_Working.pdf Show less Reply Saurabh Gupta 9 December 2014 We live in a world where innovations are being done almost every moment and patents are being filed all around the world at a growing speed every day. The matter would not have been of much concern, if the filed patents were independent and were not affecting each other anyhow. However, the story is different today. We see multiple…Read moreWe live in a world where innovations are being done almost every moment and patents are being filed all around the world at a growing speed every day. The matter would not have been of much concern, if the filed patents were independent and were not affecting each other anyhow. However, the story is different today. We see multiple players playing in various sectors fighting for the same innovations each day. Let me take an example of the smartphones (as we discussed in our last week’s blog), where patent wars is no more a new phenomenon. Multiple companies work on the same base innovation and fight for innovating before others just in order to file a patent and gain over other in terms of the so called innovation. With this market for IP rights growing at this pace, it becomes necessary to create a market where sharing these IP rights can become a much easier concept. The benefits of having an efficient market has been well enumerated in this blog post. One thing which I believe hampers an establishment of such a market is the improper legal framework that we have today. If we look at the facts, we can see how many pending IP rights claim are there in the courts all around the world. And the growing rate of patent wars has been catalysing this process every day. If a public intervention can be done that can make the settlement of IP rights disputes better and faster, the players in the market can feel easier to carry on with the research and innovations they are doing without having to worry about the disputes they may run into later. Another support that a public intervention can provide can be with respect to create an environment that supports innovation. This will lead to the entry of multiple players in the market and thus broadening both the breadth and depth of the innovations. The question that arises here is how to go about creating such an environment. I can think of two ways here. First would be with respect the tax benefits or exemptions, one might get with respect to innovation. It can also be in terms of tax benefits while buying or licensing patents. Second would be to create an open source pool, where various players can pool in together to work on a same technology, thus reducing the costs. An example could be the Android Operating System, which is an open source OS and various players (like Sony, Samsung), would work upon them as they want to modify it. Last thing that I can think on top of my mind would be to soften the process of patent filing. Things like “no need to file patents in multiple countries” could aid this process and thus help in creating an efficient market for technology. Show less Reply Carlos del Castillo Garzón 9 December 2014 One simple example of public intervention in the patent system is the subsidy that the government gives in order to promote innovation. From this economic aid a new knowledge is born and the government provides the innovator with the patent rights. Thereby innovator has the possibility of appropriating the rents which his discovery produces to him or to anyone else…Read moreOne simple example of public intervention in the patent system is the subsidy that the government gives in order to promote innovation. From this economic aid a new knowledge is born and the government provides the innovator with the patent rights. Thereby innovator has the possibility of appropriating the rents which his discovery produces to him or to anyone else and so it was that the patent market was born. But one of the disadvantages is that the only instrument to protect the implementation of these rights is the court and force firms to spend large amounts of money on trials. For example, the AIPLA estimate that, on average, when the complainant ask for between 1 and 25 million of dollars, the trial costs are, more or less, 2.5 millions of dollars. To reduce this, in 1967 WIPO (World Intellectual Property Organization) was created to promote the protection of intellectual property throughout the world and has the Arbitration and Mediation Center which is a neutral, international and non-profit dispute resolution provider that offers time- and cost-efficient alternative dispute resolution (ADR) options out of the courts (http://en.wikipedia.org/wiki/World_Intellectual_Property_Organization). On the private side, there are also solutions to the patent market. Intellectual Property Exchange International (IPXI) was founded in 2007 and is the world’s first financial exchange for licensing and trading IP rights. It offers a market alternative to litigation and private bilateral patent licensing. IPXI is based on a list of rules about how to act, issue shares, buy … IPXI’s primary product is a commoditized non-exclusive license right called a Unit License Right™ (ULR™) contract(http://www.wipo.int/wipo_magazine/en/2014/01/article_0005.html). Show less Reply David Vanraes 9 December 2014 It has been clear that the normal functioning of markets for technology has been suffering, in particularly because patent trolls. In this comment I want to nuance the aspects of universities in the context of the functioning of the markets for technologies. Furthermore I’ll point out the place of SMF(Small and medium sized firms) in the licensing market and…Read moreIt has been clear that the normal functioning of markets for technology has been suffering, in particularly because patent trolls. In this comment I want to nuance the aspects of universities in the context of the functioning of the markets for technologies. Furthermore I’ll point out the place of SMF(Small and medium sized firms) in the licensing market and the importance of the unitary European patent package. Universities can play a major role in a better functioning of the market for technologies. In Belgium there are few specific rules that exist to regulate the intellectual property rights of university-created research (Milken, 2006). Anyway a good example of an intervention that has been made to improve the functioning of the markets for technologies in Belgium is that one of the decree for a division of the net proceeds among inventors, departments and universities. Firstly in Flanders in 1991(for Flanders) and then in 1998 (for Wallonia). Since the implementation of these decrees we’ve been seeing a big rise in the importance of patenting by universities. Since these decrees, important institutes have seen the light. In 1995, VIB was founded. The VIB is the Flemish interuniversity for biotechnology. VIB shows that patented technology transfers from universities to companies can be well commercialized. Anyway there is still a long way to go.(Milken, 2006). Another Belgian example is the LRD. It is KULeuven research & Development entity to promote the transfer of knowledge and technology. The entity is separated from the university. The LRD shows is a good example of how an university can develop and use the advantages of licensing agreements. http://ttoflanders.be/en/member/ku-leuven-/ http://www.ecu.edu/cs-acad/ott/upload/milken-institute-mind-to-market-2006-2.pdf The counterpart of this is that Universities could maybe become too focused on the commercial aspect of new inventions, which could counter the development of good academic research. Secondly, It’s interesting to see who licenses proportionally the most patents. In a paper by Zuniga and Guellec (2009), they say that the firms that license proportionally the most of their patents are big firms and very small ones. There is clearly an informational identifying problem to license out patents for SME (Small and medium sized firms). In my opinion, public entities should intervene to give SME more visibility on the level of patent licensing possibilities because licensing is a very hard business. At the other hand in an article written 5 years ago on Ipeg.com they conclude that Europe’s licensing system don’t really need more governmental focus but that it is up to universities to teach that licensing is an important profession in order to avoid the “uncertainty problem”. This conclusion joins partially with the statement in a paper by Troy & Werle(2008) saying that seminars and workshops have to be set up to create awareness, that patents are a worthy object of trade, and to strengthen expertise among future business managers, lawyers, and other professionals. http://www.ipeg.com/patent-licensing-in-europe-still-a-long-way-to-go/ Finally, we could consider that the unitary European patent package is another good example of an improvement of the functioning in market for technologies. But actually it is not so true like it seems to be. I would say that this has brought a lot of difficulties. Follow a paper by the max Planck institute for intellectual property and competition law there are at least twelve reasons for concern and that the content of the European patent package has to be reconsidered again. Source : http://www.ip.mpg.de/files/pdf2/MPI-IP_Twelve-Reasons_2012-10-17_final3.pdf It is clear that public intervention and the implementation of laws has been improving a lot but we’ve arrived to a point that implementation of patent law-constructions, as the Unitary European patent package for example, cannot improve anymore significantly the functioning of the market. Seemingly the creation of awareness that patents are a worthy object of trade, has become more and more a priority. Show less Reply Andrea Carolina Rosero 9 December 2014 The transferability of patents boosts innovation in a market and provides a motivation for specialized companies to invest in R&D. Likewise, the specialization of firms improves their efficiency and a rational use of resources, with some firms specializing in R&D and others in manufacturing and distribution. Therefore, it is in the interest of firms, consumers, and the government to promote…Read moreThe transferability of patents boosts innovation in a market and provides a motivation for specialized companies to invest in R&D. Likewise, the specialization of firms improves their efficiency and a rational use of resources, with some firms specializing in R&D and others in manufacturing and distribution. Therefore, it is in the interest of firms, consumers, and the government to promote the efficient exchange of patents, and the innovations which the patents protect. Therefore, in order to boost innovation, governments have a motivation to contribute to the functionality and efficiency of markets for technology. Factors reducing the efficiency, and even the functionality, of technology markets include the high cost of licensing fees and the potential legal fees which arise from patent infringement lawsuits. We have already seen the difficulty in proving that one innovation does not infringe on a previous patent (whether in the case of sequential or complementary innovations). Licensing fees increase the cost of acquiring an innovation, and the potential for infringement lawsuits increases the risk. Therefore, in order to improve the functionality and efficiency of technology markets, governments seek to decrease the cost and the risk of purchasing a patent. Governments indirectly reduce the price of purchasing a patent by subsidizing universities and other research institutions. Although the government’s priority may actually be to steer the direction of research, the result is a less expensive innovation process, which could reduce the licensing fees. Governments have a similar impact on private companies through tax-breaks for specific industries or tax credits for R&D. In this way, while aim to governments stimulate R&D, they also make R&D less expensive, and therefore a lower price for a patent may be justified. Governments do this in a number of industries including vehicle manufacturing (specifically regarding fuel efficient vehicles) and oil and gas (specifically to promote alternative energies or to promote improved methods of extraction). Governments could reduce the risk of buying a patent by improving the patent litigation system in the country. In a previous comment, I analyzed the request of a group of technology companies to the European Commission to clarify the patent protection system. By honoring this request, regulatory authorities in Europe would reduce the uncertainty associated with purchasing patents and improve the likelihood that patents would pay-off for patent purchasing companies. Similarly, by tightening controls and reducing the incentives for Patent Trolls, as President Obama declared was his priority, governments can reduce the risk of purchasing patents. Show less Reply Aurore de Halleux 9 December 2014 So, do the markets for technology work? On the one hand, the first aim of the market is to facilitate the exchanges. In this case, the technologies are sold and bought. The Transferable rights are respected; the economic role of IP law is respected. On the second hand, the high costs related to that specific market make it unprofitable and therefore,…Read moreSo, do the markets for technology work? On the one hand, the first aim of the market is to facilitate the exchanges. In this case, the technologies are sold and bought. The Transferable rights are respected; the economic role of IP law is respected. On the second hand, the high costs related to that specific market make it unprofitable and therefore, the markets for technologies might be inefficient. It is quite accepted that when a market fails to deliver its purpose (market failure), the government is supposed to intervene to regulate the exchanges with public interventions. In the case of the market of the technology, which are the public interventions feasible? – Creating patent pools could transform the costs of many negotiations into a cost of one bigger negotiation. The costs of negotiations are therefore reduced and the exchange becomes profitable again. – Creating a platform where the sellers and the buyers of licences and patents can find each other and meet easily. Thanks to that platform, it becomes easier and cheaper to sell and buy patents and the costs linked to the identification of a potential buyer/seller are reduced. – Creating a clear legal environment. A huge cost linked to the patents is the suits costs. When the law is reinforced and very clear, useless and cloudy prosecutions will not happen as often as it does now. Therefore, large savings are also made. Those are some measures that a government could take to facilitate and to improve the market of technology. However, I think that those measures should be taken (at least) at a European level rather than at a country level: the market of some countries might be too small and push the actors to go to see across the borders. Those measures would then be inefficient if the problem is the same at a supra-national level. Show less Reply Regina Tukhfatullina 9 December 2014 The increasing value of technology and knowledge led to the dynamic development of legal regulation of relations in this area. Ideas, innovations and other expressions of human creativity are converted into private property and protected by law through the intellectual property system. As property, they are tradable assets. Licensing, the right granted by an owner of such an asset to…Read moreThe increasing value of technology and knowledge led to the dynamic development of legal regulation of relations in this area. Ideas, innovations and other expressions of human creativity are converted into private property and protected by law through the intellectual property system. As property, they are tradable assets. Licensing, the right granted by an owner of such an asset to another to use that asset while continuing to retain ownership of that asset, is an important way of creating value with these assets. Technology licenses are one type of intellectual property license, fall within the broad concept of technology transfer. Technology transfer is to transfer existing technology for application by a new user in the same area of application or in a completely new area of application by the same or a new user. It could be effected by an activity as simple as teaching and as commonly as the hiring of skilled workers to the formalizing of contracts including technology licensing contracts. One the most significant key of the development of technology market is the international technology transfer. There are several reasons why the government intervention is need for the better implementation the technology transfer: the desire to keep the technology leadership, national security, and the conditions of international agreements. A pioneer in the adoption of legislation on the transfer of technology is the United States, which, since 1948, established a system of technology transfer from science to industry. This activity has intensified in the 1980s when US Department of Commerce were given broad powers to support technology transfer. In recent years, Belarus, Russia and Ukraine also adopted legislation on the regulation of relations in the field of technology transfer. New Chapter 77 of the Russian Civil Code provides the right to use the results of intellectual activity in the single technology, created by budgetary funds. The same approach is applied in Ukraine, where the main managers of budgetary funds may transfer to enterprises, institutions and organizations that use technology, property rights (funded by the state) for it. In Belarus, research institutions and universities have the right to agreement with higher authorities to create a unitary enterprises whose main activity is to be carrying out research, development and technological works or the production of high-tech goods (works, services). Along with the regulation at the national level, the international law in the field of technology transfer has developed. The results of many years of intergovernmental negotiations between UNCTAD and UNCITRAL were reflected in the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights of 1994 (TRIPS). In recent years, there are active discussions of issues of combining the protection of intellectual property rights and the need to solve global problems such as the treatment of epidemics (e.g. HIV/AIDS) and environmental protection. For example the Article 31 (f) of TRIPS prevents the granting of a compulsory license exclusively or mainly to export to a country in need of certain medicines. In view of the increasing globalization increases the interest of all countries in the dissemination and implementation of technologies that have the character of “public good” and allow to solve global problems. In this regard, it should be expected the intensification of efforts for the development and adoption of new international legal instruments to facilitate the international transfer of technology to developing countries on concessional terms. References: 1) http://www.unido.org/fileadmin/user_media/Publications/Pub_free/Role_of_intellectual_property_rights_in_technology_transfer_and_economic_growth.pdf 2) http://www.unece.org/fileadmin/DAM/ceci/publications/icp.pdf 3) http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?doclanguage=en&cote=eco/wkp%282006%2967 4) http://ec.europa.eu/invest-in-research/pdf/download_en/ip_recommendation.pdf 5) http://www.wipo.int/export/sites/www/sme/en/documents/pdf/technology_licensing.pdf 6) http://www.rupto.ru/rupto/nfile/3b05468f-4b25-11e1-36f8-9c8e9921fb2c/Civil_Code.pdf Show less Reply Zhang Xiaomeng 9 December 2014 The transferability of patents help the high-tech industries get profits and improve revenues in the telecommunication market. However, the less information of market transaction could be the barrier for exchange and trade IP unprofitable. Public intervention and some policy measures works on this issue in some extent. The less information connection between buyers and sells cost a lot for trading of…Read moreThe transferability of patents help the high-tech industries get profits and improve revenues in the telecommunication market. However, the less information of market transaction could be the barrier for exchange and trade IP unprofitable. Public intervention and some policy measures works on this issue in some extent. The less information connection between buyers and sells cost a lot for trading of patent right. If the patent owner did not get enough profit on the market, as the less information transaction or have the goal to seizing he market, they will not be motivated to invest in innovation and the new patent, which they will continue holding the patent and using the original patent to get decreasing profits. Some policy measures could be help to profit the patent through sale or licensing which improve the patent valorization on the market. Gains from trade of patent and licenses could be regarded as a more efficient way to generates additional incentives to invest in the new patent. Policy intervention could encourage the short term form of patent valorization. The first instrument is building the exchange intellectual property rights (IPR) platform, in order to match process between potential sellers and acquirers by centralizing information on available needs. The main task of these platform is to attract the small and potential buyer and sellers, let more patent registers in different countries could get access to information from each other, develop the further patent database. In Europe, Patent Register of the European Patent office is a key instrument to provide companies to develop innovation. The second instrument is to establish the standard guidance or advice in view of reducing screening, information and negotiation cost. However, only standard guidance is not suitable to the patent by different commercial situations. Local implementation of consultant should guide the small partners depending on the local market situation. In Europe, we could suggest the Enterprise Europe Network step up the local service to prove legal, commercial and managerial support to valorization. It is also works enhance the patent exchanging by financial support to develop technology. The principle of subsidiarity is to cooperate with other local public authorities. The third instrument is using the patent funds from the third public authorities. This way could be reduce the transaction cost through founding the patent pool and for future development in order to attract the relevant patent holders into a joint licensing scheme. In Europe, the patent pool shall be in compliance with EU state aid and competition policies. Reference: 1. Understanding Innovation: The Role of Policy Intervention 2. Options for an EU instrument for patent valorization Show less Reply Rui liu 9 December 2014 Government intervention ,or government regulation,is divided into two broad categories based upon the regulation’s intent:economic intervention and social intervention.Economic intervention sets market conditions.Often, the application of economic intervention changes the allocative and dynamic efficiency of a market; it may also affect market equality and fairness. Social intervention is the imposition of requirements on firms to protect the welfare of…Read moreGovernment intervention ,or government regulation,is divided into two broad categories based upon the regulation’s intent:economic intervention and social intervention.Economic intervention sets market conditions.Often, the application of economic intervention changes the allocative and dynamic efficiency of a market; it may also affect market equality and fairness. Social intervention is the imposition of requirements on firms to protect the welfare of society or the environment. Typically, social intervention seeks to correct a market externality. Classified by its beneficiaries, there are two types of innovation: market innovation and social innovation. Market innovation typically benefits producers, consumers and society at large,:Social innovation refers to “product and process innovations that create social benefits. I will take the automobile Manufacturing in U.S. for instance.Atkinson and Garner (1987) find that social intervention had a positive impact on both market innovation and social innovation in the U.S. automobile industry. They study the impact of the flexible performance-standards-based regulatory regimes that were implemented in the 1960s and 1970s, including the introduction of stringent emissions standards with the Clean Air Act Amendments of 1970, the corporate average fuel economy (CAFE) standards enacted by the Energy Policy and Conservation Act of 1975, and the stringent safety standards implemented by the National Traffic and Motor Vehicle Safety Act of 1966. Importantly, Atkinson and Garner argue that these disruptive environmental standards brought the American auto industry more in line with customer demand for lighter, more fuel-efficient automobiles, helping it compete with already-efficient Japanese vehicles, which began arriving on the domestic market in the 1960s. Hence, Atkinson and Garner argue, not only did the environmental performance standards bring about social innovation in the form of reduced emissions in the short term, but those same innovations also allowed U.S. automakers to retain market share, and thus, over the long term as the regulations became integrated into the global market, those social innovations evolved into market innovations. The second example is about Pharmaceutical and Biotechnology Manufacturing in U.S..Hauptman and Roberts (1987) use regression models to examine the effect of increased stringency of social regulation on young firms in the biotechnology industry, and they find that the resulting compliance uncertainty reduced market innovation—especially that of advanced technology products—but that innovation rebounded after several years. The regulation they examined was a 1976 FDA amendment that increased the preapproval scrutiny of medical devices. Following the amendment, Hauptman and Roberts observe a sharp drop in production. After four years, however, the trend was reversed, leading the authors to hypothesize that the firms’ management adapted their processes to operate effectively in the more stringent regulatory environment. Wrubel et al. (1997) also observe this rebound effect in a study of the impact of social regulation on the market innovation of genetically engineered microorganisms (GEMs), but they attribute the recovery of innovation to adaptation not by firms, but rather by regulators. They assert that early GEM innovators suffered from both regulatory stringency and compliance uncertainty due to unclear regulatory requirements, but, as the industry matured and regulators gained more experience with GEM products, regulations were clarified and streamlined, thereby easing the burden on innovation. To sum up,public intervention should be flexible, allowing the firm and the market to decide the optimal path to implementation and take technical innovation into account. References: Porter, M. E., and C. van der Linde. 1995b. Toward a New Conception of the Environment- Competitiveness Relationship. Journal of Economic Perspectives 9(4): 97-118. Porter, M. E. 1991. America’s Green Strategy. Scientific American 264(4): 168Popp, D. 2003. Pollution Control Innovations and the Clean Air Act of 1990. Journal of Policy Analysis and Management 22(4): 641-660. Pilkington, A., and R. Dyerson. 2006. Innovation in Disruptive Regulatory Environments: A Patent Study of Electric Vehicle Technology Development. European Journal of Innovation Management 9(1): 79-91. Gerard, D., and L. B. Lave. 2005. Implementing Technology-forcing Policies: The 1970 Clean Air Act Amendments and the Introduction of Advanced Automotive Emissions Controls in the United States. Technological Forecasting and Social Change 72(7): 761-778. Golec, J., and J. A. Vernon. 2010. Financial Effects of Pharmaceutical Price Regulation on R&D Spending by EU versus US Firms. Pharmacoeconomics 28(8): 615-628. Golec, J., S. Hegde, and J. Vernon. 2005. Pharmaceutical R&D Spending and Threats of Price Regulation. Working Paper. National Bureau of Economic Research, Cambridge, MA. Grabowski, H. G., and J. M. Vernon. 1977. Consumer Protection Regulation in Ethical Drugs. American Economic Review 67(1): 359-364. http://www.itif.org/files/2011-impact-regulation-innovation.pdf Show less Reply Laurence Busseniers 9 December 2014 There is a need for public intervention to improve the functioning of market for technology. The public authorities may intervene with some different means. I will try to expose the most important intervention that address two principal types of costs that result in market failure: the underutilization of IP and the wrong pricing problem of technology. First, public authorities should organise…Read moreThere is a need for public intervention to improve the functioning of market for technology. The public authorities may intervene with some different means. I will try to expose the most important intervention that address two principal types of costs that result in market failure: the underutilization of IP and the wrong pricing problem of technology. First, public authorities should organise and subsidize an intermediary market between the seller (the IP patent owner) and the buyer (the product developer). This intermediary market provide a meeting point that bridge both parties easily. An automatizated version could be done, for example an online patent exchange platform worldwide used. Secondly, there is a need for standardized procedures and norms so that the contract between both parties follows a guideline and prevent to sellers to set the price they want for their technology. This strategy could help to provide a “fair price” for buyers. Third, transparency is crucial because it allows the process of patent application and patent process to be clear for everyone. Moreover it reduces the lack of information. Finally, the public authorities should promote a system of partnership between universities and industries. This type of behaviour promote exchange of knowledge improve competition among firm and allow a commercialization of universities R&D results which is valuable for the reputation of the university. Some interventions are already set up. For example: the market for green cars. The European Commission publish new measures in order to promote car makers to invest in CO2 reduction technologies. On the one hand ‘The European Green Cars Initiatives “will provide financial support to research in this scope. On the other hand, the member states will give reduction of taxes for low CO2 cars user in order to stimulate the purchase of that type of car. Source: https://faculty.fuqua.duke.edu/~charlesw/s591/Bocconi-Duke/Bocconi/S2_2008_02_11_MFT/Cockburn_-_Is_the_Market_for_Technology_Working.pdf http://www.forbes.com/sites/ciocentral/2012/04/18/the-emerging-global-market-for-intellectual-property/ http://ec.europa.eu/news/energy/110830_en.htm http://ec.europa.eu/research/transport/road/green_cars/index_en.htm Show less Reply Gwenael Bailly 9 December 2014 As an introduction to this comment, I would like to recall Coase’s theorem: “without transaction costs and with well-defined ownership rights, bargaining will lead to an efficient outcome”. This theorem is linked with transferability: it assures that assets are used by the agent with the highest valuation. But for the purpose of this article, we have to consider the case…Read moreAs an introduction to this comment, I would like to recall Coase’s theorem: “without transaction costs and with well-defined ownership rights, bargaining will lead to an efficient outcome”. This theorem is linked with transferability: it assures that assets are used by the agent with the highest valuation. But for the purpose of this article, we have to consider the case (which is the real case) of a world with transaction costs and thereby with government interventions. Those interventions can be efficient if and only if the two followings assumptions are respected: – Transaction costs implied by the regulation must be below other transaction costs that wouldn’t have implied government’s intervention. – Benefits for the transaction must be higher than the costs. If those two assumptions are not respected, the intervention of the state implies a loss and is not optimal. According to us, one good way to foster innovation and patenting could be to subsidize more the academic research. With the intervention of state, academics would be able to work on new technologies in different sectors and sell their findings to companies. Indeed, most of the universities have wide networks and are already working with big companies and this facilitates the meeting between the needs of the two stakeholders: researchers produce new knowledge as it is their job, and companies can integrate that knowledge in new applications. In Wallonia, the “Service Public de Wallonie” and the “DGO6” already grant subsidies to companies and research agents like universities. In Europe, PATLIB (PATent LIBrary) network has been created to provide users information about patents. The network is divided in local centers (countries) that are aware of the needs of each local market. Therefore, employees are able to advice users – especially SME, privates and academics – and provide them the information they need. In the USA, same kind of centers do exist and they are called “Patent and Trademark Resource Centers” (PTRCs). They are designed by the USPTO to “disseminate patent and trademark information and to support the diverse intellectual property needs of the public”. These centers allow users to know if something is already patented, who owns the patent and answer questions about specific patents. To conclude, through our researches we saw that the same kind of libraries exist across different countries of the world and that governments are aware of the importance of sharing knowledge via existing patents. That is only one kind of tool that can be used to meet expectations of the two parts but is already very powerful. Maybe it would be a good idea to create a wider network, encompassing knowledge of more unions (for example a library for both US and EU) to have access to the available technology from everywhere in the world. Sources:  http://www.uspto.gov/products/library/ptdl/background/index.jsp  http://fr.wikipedia.org/wiki/Transfert_de_technologie#En_Belgique  http://www.epo.org/searching/patlib/about.html  http://en.wikipedia.org/wiki/Coase_theorem  http://fr.wikipedia.org/wiki/Th%C3%A9or%C3%A8me_de_Coase Show less Reply Augustin de Bernard de Fauconval 9 December 2014 First of all, as we saw in class, the recent updates in IP laws have had a positive impact on the development of a functioning market for Intellectual property and technologies. Indeed, these rights give the incentives to invest in research and development as it ensures the inventor to have exclusivity and the right to transfer that IP if wanted.…Read moreFirst of all, as we saw in class, the recent updates in IP laws have had a positive impact on the development of a functioning market for Intellectual property and technologies. Indeed, these rights give the incentives to invest in research and development as it ensures the inventor to have exclusivity and the right to transfer that IP if wanted. But the main problem on that kind of IP market is that a high level of uncertainty exists: they are a lot of information asymmetries. On the side of the patent owner: the patent lies in a coded form and often the inventor’s knowledge exceeds the technological information that lies in the patent. On the other side – the buyer side – the economic agents have little information about the quality and the efficiency of he patent before they buy it. For an intellectual property market to perform in an efficient way, all market agents’ needs to have access to information about the patents specifics, the cost of obtaining information should not be too high. We thus need transparency on this kind of market and the various governments’ need to create an appropriate legal framework for IP market. Now a day, the main problem is that both sides – buyers and sellers – are reading to trade patents but they meet the difficulty to find each other. We can illustrate that by showing that in Europe – for example – there is no intermediary market for Intellectual Property. And as said in a WIPO article (1): “We know that no market has grown without a sizeable intermediary sector (…)”. Thus, what is so far missing is a system that will match the needs of both sides on the marketplace. To do so, the authorities have to go beyond patent registration. They will have to provide specialists that will analyze, categorize, value, trade patent a very large scale. They should be the intermediary between buyers and sellers as they have all the information needed. Furthermore, the governments could use various tools to promote the diffusion of knowledge and the transferability of patents. First, as it is already the case, public authorities should continue to subsidize universities and public research funds. And then make all this knowledge available to the public at very low cost (or even for free). Besides, in my opinion the system of scholarships given by the government is a good way to promote innovation. Indeed, it gives incentives to the best “students” to go to university and to undertake some research. Besides, the public authorities could use the “voluntary buy-out patents” technique. This technique consists in buying a patent from an inventor and then allows all the economic agents to use it freely. Then, it is really important that the public authorities intervene to reduce the transaction costs on this market. In order to do so, they have to provide a legal framework that is extremely precise and complete. As examples, we can quote the tries from the IOS (International Standard Organization) and the WIPO (World Intellectual Property Organization). Indeed, in 2013 the WIPO has launched a new marketplace for economics agents that were seeking for shared innovations, IP rights and new technologies on the “Green” market. To conclude, I think that governments should not be the only one to seek for solutions. Even if they are well placed to do so, because of their goal to maximize social welfare and to promote the diffusion of knowledge. The various governments should also come to an agreement about what the legal framework of such a market would be. They have to provide precise and complete laws to ensure that information will be easily accessible for all the economics agents. I also think that companies should try to be more involved in the development of IP marketplace as it could considerably lower their costs (R&D costs, transactions costs, …) and allow them to be more efficient. Finally, the public authorities should have in my opinion the role of intermediaries as describe in my comment earlier. They could bring buyers and sellers at a low cost. Furthermore, they don’t seek to make profits but their first goal is to increase public welfare. Sources http://www.wipo.int/export/sites/www/sme/en/best_practices/pdf/european_ip_market.pdf http://www.uspto.gov/news/publications/IP_Report_March_2012.pdf http://www.owen.org/musings/ip http://www.wipo.int/pressroom/en/articles/2013/article_0025.html http://www.mpifg.de/pu/workpap/wp08-2.pdf Show less Reply Karla Rivera 9 December 2014 The emergence of markets for technology has been driven by two key factors: increased use of IP rights and increasing levels of collaboration across firms. From a theoretical point of view, intervention in markets for technologies can be justified if it generates a higher level of social welfare. Economists argue that technology markets underperform where the IP system is weak because…Read moreThe emergence of markets for technology has been driven by two key factors: increased use of IP rights and increasing levels of collaboration across firms. From a theoretical point of view, intervention in markets for technologies can be justified if it generates a higher level of social welfare. Economists argue that technology markets underperform where the IP system is weak because companies are reluctant to license out their technologies in the face of high IP theft risk. This causes the pool of technologies available for licensing to shrink and inhibits collaborative and follow-on innovation. On the other hand, a strong IP regime, however, can inflate the cost of purchasing technologies. In settings in which innovation is cumulative and ownership of essential technologies is spread among many right holders, licensees are vulnerable to “royalty stacking” (whereby the cost of developing new inventions increases because of the sum of royalties incurred from negotiating with each patent holder) and risk “hold-up” of their invention (where a patent holder can refuse to license a key technology, or will only do so for a larger royalty payment). This, too, inhibits follow-on innovation. An example of state intervention in IP is the case of patents in the pharmaceutical sector involved in pricing schemes. Pharmaceutical prices are free in a small number of OECD countries: United States, Germany and Denmark. Moreover, the Netherlands allows considerable flexibility in a mixed system of regulation. In Spain, the system of price intervention administratively sets a maximum price calculated based on their cost. The restrictive criteria for reviewing prices have caused the appearance of relatively low prices (medicines that have long been on the market) and a very fast pace of introduction (promotion, prescription, dispensing and consumption) of new products and much more expensive. We also have the example of the UK, which has a scheme based on the profit rate, this is the least damaging price flexibility by allowing each company. In general the European Union, seeks to harmonize interventions prices so that internalize the welfare of those involved. Compensation may be needed to achieve supranational agreements. Show less Reply Stroobants Benoit 9 December 2014 The development and the productivity of technology markets are enhanced by the creation of patents. It tends to smooth the exchanges and to reorganise technology markets in a more convenient way. Patents allow the spread of knowledge and expertise, not only in order to overcome information asymmetries and to provide information but also to decrease the transaction’s costs on these…Read moreThe development and the productivity of technology markets are enhanced by the creation of patents. It tends to smooth the exchanges and to reorganise technology markets in a more convenient way. Patents allow the spread of knowledge and expertise, not only in order to overcome information asymmetries and to provide information but also to decrease the transaction’s costs on these markets. Trough these cost’s reduction and information’s release patents are able to support innovative firms on the market. Nevertheless, due to the increasingly large number of IP rights, patent transfers become more and more affected, for instance by the existence of large costs incurred through the writing and the negotiating of licensing contracts. When you make a deal, it’s essential that each entity is able to find its own interest in order to reach the best agreement that will satisfy everyone. However, due to the information’s asymmetry, organisations spend a lot of time and money trying to achieve a consensus about technologies transfers, even sometimes without succeeding to clinch any deal. Indeed, if you want to develop the market of new technologies in a convenient way, buyers and sellers have to find a common ground. As buyers are companies that produce and sell innovations to the end users, they will agree to buy technology only through a price at which they will be able to reach their breakeven point using these new technologies. In the meantime sellers, who are focus on R&D researches, want to set the highest price and they will succeed to do so. Therefore, I think it’s essential that public authorities allow the access to patent system information and be involved in the innovation market failures; they have to find a way to lower these transfer prices. For instance, they should start by removing all barriers to have access to the right information of the market or by subsidizing organisations in their researches and promoting at the same time the entrance of new firms on the market of new technologies. Whatever the decisions they will take, I think it become essential that government takes drastic measures in order to prevent abuses and inequities. They have to take care of the roles of each actor on the market and carry out the development of these markets in a good atmosphere where the progress and rewards would increase the total social welfare. It could enhance the incentive of various actors to enter the market, which is exactly how start to make a business flourished. Show less Reply Ankur Kaul 9 December 2014 As dictated by economic theory, a market where buyers and sellers can interact freely, is essential for its existence. Thus for technology to develop, its market must allow such unhindered interaction. The government is usually in a position to promote this, acting as a regulator. In a large number of countries, the government is often the largest contributor to research institutions,…Read moreAs dictated by economic theory, a market where buyers and sellers can interact freely, is essential for its existence. Thus for technology to develop, its market must allow such unhindered interaction. The government is usually in a position to promote this, acting as a regulator. In a large number of countries, the government is often the largest contributor to research institutions, allowing significant leverage in influencing the interaction between these upstream bodies, and the companies downstream that utilise the results of such research, promoting the development of the market. In India, many research institutions, that are also a part of public universities, often work in collaboration with companies that work in the commercial side of the same subject area. These ‘centres of excellence’ as they are usually referred to, receive significant support from sponsoring companies for basic research in areas as diverse as computing to chemistry. Increasingly, a lot of research based start-ups are acquired by large enterprises to acquire the intellectual property that has been developed. Although the acquired firm straddles both the research and commercial aspects, it can be considered to be concentrated at the former end. This can be observed in the internet industry, for instance, Facebook’s acquisition of Oculus Rift, a virtual reality start-up. Thus, it would appear that encouraging spin-offs from research bodies, that can demonstrate the commercial viability or attractiveness of an invention, could promote the market for technology. A final way, which is perhaps more direct, would be if a company asks for research inputs in return of monetary awards. Perhaps the closest to the economic concept of buyers and sellers, it would essentially replicate the well known Longitude Award, with the research being directed for commercial exploitation rather than public use. Thus, these three ways could significantly promote the market for technology. Show less Reply Mayank Singhal 9 December 2014 An interesting example to be studied is the country of Israel in the context of technology innovation. The nation has one of the highest densities of technology start-up firms globally. It currently has around 4800 tech startup firms and attracts the highest amount of venture capital per person. The government intervention has been significant in ensuring that a sustainable market…Read moreAn interesting example to be studied is the country of Israel in the context of technology innovation. The nation has one of the highest densities of technology start-up firms globally. It currently has around 4800 tech startup firms and attracts the highest amount of venture capital per person. The government intervention has been significant in ensuring that a sustainable market for technology exists. It took the following steps 1. Investment incentives and capital market reforms – The Law for encouragement of Capital Investment(LECI) was passed enabling domestic and foreign capital inflow into R &D sectors. The law did not explicitly favor the high-tech or any specific industrial sector, 9 but, rather, ventures with high value-added and marketing capabilities in local and international markets. 2. Government support for R&D- The Israel government currently spends around 4.6% of its GDP on R&D 3. Incubation Initiatives – The Government initially launched the Magnet program designed at attracting the succesful Israelis working in the Silicon Valley to return and set up their own firms and provided them with the first round funding and support(the military played a major role ,especially the Data analysis wing, by often acting as the customers). 4. Venture Capital creation – Israel also created a market friendly environment for venture capitalists by providing them with various sops and privileges. Thus , as a result of direct public intervention, currently the technology market in israel is thriving Show less Reply Midas De Bondt 8 December 2014 For this contribution I will use the short paper of Professor Willian H. Melody on the liberalization of the telecom market. He starts his paper by giving 5 characteristics of well-functioning markets (generic markets, not telecommunication market). I will use these characteristics to look for potential public intervention in each of them. I will also show that the unification of…Read moreFor this contribution I will use the short paper of Professor Willian H. Melody on the liberalization of the telecom market. He starts his paper by giving 5 characteristics of well-functioning markets (generic markets, not telecommunication market). I will use these characteristics to look for potential public intervention in each of them. I will also show that the unification of patents in the European Union through the European Patent Office has had its influence on each of these factors. Ease of Market Entry and Exit A public intervention that could facility market entry into the technology market could be to lower the requirements for patent filing. The European Patent Office has largely reduced the requirements by only demanding 1 patent procedure to be covered in the entire Union, as opposed to several procedures before. Obviously this has lowered the cost to actually acquire the patent. Another intervention that has more of an impact on the actual technology market is to use the same standard formats for patents. This will allow even small technology players to put their few patents on the market in a way that all stakeholders have understand what it is. By standardizing the patent filing forms across different countries, the EPO has at least standardized some of the required information across the Union. Absence of Significant Monopoly Power The next characteristic is the absence of significant monopoly power. It is easy to see that this is related to the previous factor: when entry is facilitated, the likelihood for monopoly markets is diminished. A public intervention to prevent one player to have monopoly power in a certain technology market is to attract players that can compete. The EPO has obviously reached this by enlarging the market horizon. This can be explained by a simple example: a German player and a Spanish player have a technology that serves exactly the same goal, but is filled in differently. Before, it could be possible that both would have monopoly power for the market for technologies that serve a certain goal. Unifying the patent horizon may bring in new players and may cause the two players to compete in selling/licensing their technology. Widespread Availability of Information A public intervention is obviously to create a centralized database, in these times preferably online. The EPO has achieved this by its European Patent Register. Absence of Market Externalities In class we have seen several potential public interventions to tackle negative as well as positive externalities related to the patent/technology market. One that we touched upon is innovation prices. Even though I believe this approach is far from perfect, I will pick an example from the EPO: They have a “European Inventor Award”. Even though there is no financial compensation, innovation is stimulated through, amongst others, publicity, networking,… Achievement of Public Interest Objectives The Public Interest Objective that I will use to illustrate this point is the improved spreading of technology. Obviously there are numerous welfare benefits when technology becomes more widespread. The EPO has contributed to this objective by, for example, increasing the access to numerous patents (as already stated above in the characteristic of “widespread availability of information”). Sources: Liberalising Telecommunication Markets: A Framework for Assessment, William H. Melody Website European Patent Office Show less Reply Christopher Staudigl 8 December 2014 As outlined in class and this discussion, IP laws fostered the development of a functioning market for technologies especially because they created exclusivity and transferability of intellectual property. However, high uncertainty in trading (either selling or licensing) in this market exist, information asymmetries make negotiations difficult and high transaction costs prevent an efficient market. The coase theorem suggests that…Read moreAs outlined in class and this discussion, IP laws fostered the development of a functioning market for technologies especially because they created exclusivity and transferability of intellectual property. However, high uncertainty in trading (either selling or licensing) in this market exist, information asymmetries make negotiations difficult and high transaction costs prevent an efficient market. The coase theorem suggests that in the absence of transaction costs, an efficient allocation of property will be reached through private bargaining. But as noted in a review of patent licensing and transaction costs, licencing often does not take place due to too high transaction costs. Doing research on how governments may improve the functioning of a technology market, several aspects where found. Some of these are outlined in the following. First, as explained above in the logic of coese theorem, public interventions may reduce the transaction costs in the technology market. One way to reduce transaction costs is an effective and efficient legal system. In times of globalization, just to consider last weeks discussion on the smartphone patent wars, it seems to be especially important to agree on common international standards in order to enhance the market for technologies. In a framework act on intellectual property it is suggested, for example, that Korea’s government should contribute to the harmonization of domestic and international intellectual property laws. To give more concrete examples, first one can name the efforts of the international standard organization (IOS) to create an international standard for patent evaluation in 2008. Unfortunately, their proposal to have a project team working on this was rejected by several countries. Another example is a US law introduced in 2002 which requires companies to disclosure certain intangible assets. The US economy has been moving from a manufacturing focused one towards one focused on intellectual capital. Still, it faces issues occurring on its market for technology. One is related to problem of the valuation of a patent. As there are no common procedures how to measure the value of intellectual property and rules that companies have to disclose their intellectual property to the public are missing, companies rather hide their intellectual property due to a fear of competitors. To alleviate this effect, an idea could be to create incentives for companies to disclosure this information and start evaluating their intellectual property more accurately. One way to do so could be tax incentives. With the R&D tax credit, the US has a tool to promote investment in R&D. However, this credit is only provided for the creation period of knowledge. With an extension to a permanent tax credit companies could be further stimulated to evaluate intellectual property, which would spur a more efficient market for technology. Another way to improve evaluation of intellectual capital is increasing investment in research on evaluation methods. This seems to be needed so that the high degree of uncertainty in technology markets can be reduced. Last but not least, in order to decrease transaction costs, the government could more promote the formation of patent pools.This may be especially valuable for the US as the legal guidelines for antitrust implications are in place since 1995 and proved to work well in a review in 2007. To conclude, a serious of actions can be taken by governments to improve the markets of technology. However, some of them are particularly difficult to implement and many factors and perspectives need to be considered. As an example, a government that aims to reduce transaction costs, needs at the same time pay attention that it does not itself create additional transaction costs that are even higher than the original ones. Sources: Kenan P., Jarboe R., (2008), Intangible Asset Monetization: The Promise and the Reality, Athena Alliance http://www.meso-nrw.de/toolkit/tools/tools-costs-analysis-2.html http://www.wipo.int/edocs/lexdocs/laws/en/kr/kr087en.pdf http://www.athenaalliance.org/weblog/archives/2014/11/new-study-on-patent-licensing-costs.html http://www.iam-magazine.com/blog/Detail.aspx?g=04c39ef2-5788-41e7-b772-7db5d103bb5d Show less Reply Federico Perciaccante 7 December 2014 In all my past comments, whenever I got the chance, I have put a good word on the various ways that make feasible for knowledge to be shared, possibly without any -or at least with limited- damage for the original owner of the innovation. I did this because I consider the public wealth as a bigger achievement than the sum…Read moreIn all my past comments, whenever I got the chance, I have put a good word on the various ways that make feasible for knowledge to be shared, possibly without any -or at least with limited- damage for the original owner of the innovation. I did this because I consider the public wealth as a bigger achievement than the sum of many private fortunes, and because in my view the role of the State in such an extent is fundamental. Therefore I look with a favorable eye at all the policies, being those direct State policy or just indication to firms, that focus on the maximum possible exploitability from all the innovation that public and private research put on the market. Of course I am aware of the undesirable side-effects of such a method, being the property right one of the main pillar upon which our system is based, and that is precisely why I personally welcome the initiatives that rely on shared interest and profits more that the ones, implemented by the State authority, that merely impose on subjects the condivision of their results, in the name of the public benefit. First example that comes to my mind without searching the web is crow-funding: even if it does not represent a form of governmental intervention, I really liked how, for example, many artists solved the longstanding problem of music incomes crisis by just thinking different, and how they were rewarded by their fans. Another interesting case that try to solve the externalities problem related with the IP rights is the one provided by IPXI. Like crow-funding, its not an example of State intervention, but it shows how private initiative can sometimes be a good way to solve problems a Government needs more time to regulate. IPXI is basically a market exchange for property rights, where the stocks are represented by ULRs (unit license right), that are intended as a single-time right for the buyer to exploit a certain idea or technology for his purposes. In this case, being the market for IP rights technically accessible to all, the major impact is on transaction costs, that are severely reduced. Talking about State intervention, I personally think that public funds to research are the better way a Government can solve the problem of innovation costs. This is done mainly through agreements between State and universities, or with the provision of public scholarships to the most deserving students. The great advantage of being relatively free from the logic of profit, which belongs more to the private sector, is just the first of the characteristics that makes public funding a good choice: another important aspect is that the State can dispose of the technologies made available from the research without any constrain, and arguably the choice of a State should be in favor of the population, and more in general of the public wealth. Of course positive synergies can occur between firms and universities as well: outsourcing the R&D processes is an alternative that permit to each subject to focus on its principal task, with all the benefits implied. Sources: https://www.ipxi.com/ http://www.keepeek.com/Digital-Asset-Management/oecd/science-and-technology/who-licenses-out-patents-and-why_224447241101#page4 http://en.wikipedia.org/wiki/TRIPS_Agreement Show less Reply Stefano De Martini 7 December 2014 I believe that the creation of a market for technology would be a positive boost for the patent system and a good improvement for innovation; a vertical process, where you can transfer the patents between firms for money or just by licensing, it would also be a good way to eliminate the many useless patens that are created not for…Read moreI believe that the creation of a market for technology would be a positive boost for the patent system and a good improvement for innovation; a vertical process, where you can transfer the patents between firms for money or just by licensing, it would also be a good way to eliminate the many useless patens that are created not for innovations but in order to prevent rivals to implement a new technology. As we saw from the article a market for technology derives from the possibility of having transferable rights; transferability will obviously have some positive effects on the market. As pointed out by Pluvia-Zuniga and Guellec the division of labour increases the diffusion of technology, reduces duplicative inventions and increases downstream competition. Certainly having a market for technology come with some costs and difficulties. One of the biggest problems would be trying to coordinate buyers and sellers. It is, often, hard to create a market/platform that enables a good interaction between researchers, innovators and firms. Another possible problem that came up in my mind are the costs related to mediation and contracts, this is a problem that could actually be solved by public interventions; in fact the speed of negotiations can be increased and the complexness of contracts could be revaluated whit specific public reforms that may limit certain loopholes in the patent system. I believe that the Obama administration actually took a step in this direction in 2011, instead of an average wait time of almost three years now they guaranteed a 12 months turnaround. http://www.whitehouse.gov/the-press-office/2011/09/16/president-obama-signs-america-invents-act-overhauling-patent-system-stim This are only some of the many problems related to market of technologies and, in order to work, there has to be some intervention by external intermediaries. An intermediary (or go-between) is a third party that offers intermediation services between two trading parties. The intermediary acts as a conduit for goods or services offered by a supplier to a consumer. http://en.wikipedia.org/wiki/Intermediary Typically the intermediary offers some added value to the transaction that may not be possible by direct trading. Something that can ease the process and can allow a reduction of uncertainties, would be to lower and control asymmetries in information; obviously if information are clear transferable rights are easier to do. I believe that a way to do so would be to increase spillovers between companies and researchers in universities; if they have enough information between each other they would be able to work while reducing costs and don’t waste time in implementing the same innovation. A good public intervention could be through the creation of a specific platform that can help find and match buyers with sellers, that helps new entrants to develop their businesses and eases the process of transferability by financing the cost of not knowing where to look for. As I stated at the beginning of the comment I strongly believe that the creation of a market for technologies, therefore having the possibility of transferable rights, is in favour of innovation and can bring many economic positive effects. In order to achieve something greater, though, I believe that the role of intermediaries is crucial; they make the market for technologies work better they reduce the costs and the problems that I stated above, intermediaries are useful to match and identify potential partners. Their role is also to introduce businesses in the market and help them find some missing information, in this sense public authorities could be the best intermediaries, they are a third external party that should have has their final goal an increase in the public welfare. Show less Reply Luyanqi Zou 7 December 2014 From an economic point of view, the exclusive rights of patent law and transferable rights are created to protect the rights of the patent holder. On one hand, the patent exclusivity allows innovators to get appropriate return from their inventions as it would be their primary motivation to engage in innovative activities. On the other hand, the patent transfer-ability can…Read moreFrom an economic point of view, the exclusive rights of patent law and transferable rights are created to protect the rights of the patent holder. On one hand, the patent exclusivity allows innovators to get appropriate return from their inventions as it would be their primary motivation to engage in innovative activities. On the other hand, the patent transfer-ability can be used to ensure the patent holder to obtain the maximum benefit of the asset. Thus, it provides the foundation with the creation of technical trading market. Parents can be transferred through transaction and authorization. Upstream businesses and institutions specialize in innovation of knowledge and technology, and downstream enterprises can purchase and use these new knowledge and technologies, which paved the way for the vertical separation of the high-tech industry. But I found that, in reality, the technology market is not in such a perfect situation. In the pharmaceutical industry, for example, large pharmaceutical companies prefer to depend on their own internal organization to develop new drugs, rather than obtain patents from other research institutions or universities’ researchers. Because of the high cost of information acquisition, large pharmaceutical companies tend to strengthen its market dominant position by using its own proprietary advantage to get a forced coercion cartel over other smaller competitors, achieving more benefits through patents. Taking French pharmaceutical company Servier as an example, in order to protect its best-selling blood pressure drug ‘perindopril’ from price competition within the EU generic drugs, the company led a series of avoidance-competition agreements with five generic drugs manufacturers through its dominate market share in cardiovascular medicine. Because competitors have reached a series of settlements in patent when accessing to new technologies, Servier realized exclusive competition and delayed generic drugs to enter the market. The behavior of Servier and the other five companies is not only a detrimental conduct to the patient and the public budget, but also violates EU competition rules. In July 2014, they are imposed a fine by the European Commission amounting to € 427.7 million. According to the European Commission’s investigation, Servier offered one of the five generic companies a license for 7 national markets. In return, this generic company agreed to “sacrifice” all other EU markets and stop efforts to launch its ‘perindopril’. Furthermore, Servier gained the certainty that the generic producers would stay out of the national markets and refrain from legal challenges for the duration of the agreements. If we look from the perspective of patent law, Servier’s behaviors for patents competitor is legal. However, if we see it from the framework of competition law, the behaviors of Servier violated EU antitrust rules which prohibit the abuse of a dominant market position (Article 102 TFEU). Each of the settlements between Servier and its generic competitors was also an anti-competitive agreement prohibited by Article 101 TFEU. Besides Servier, the Danish pharmaceutical company Lundbeck were also punished by European Commission because of similar patent settlements with the other competitors. In fact, in early 2008, European Commission published a preliminary report on pharmaceutical sector inquiry highlights cost of pharma companies delaying tactics’ in the number of IP / 08/1829 in a press release. This report takes a sample of medicines that faced loss of exclusivity in the period 2000 to 2007 in 17 Member States and estimates that additional savings of around 3 billion euros would have been possible on that sample over this period if generic medicines had entered the market without delay. From the above case, the Patent Law should focus on protecting the interests of the patent holder, so that the patent holders can maximize the benefits of the patent market by the patent deal. When the patent holder uses the patent of transferability to avoid competition by using its abusive dominant position, patent law has limited ability to maintain order in patent market. In this condition, the competition law has play an irreplaceable role in order to maintain the order of the patent market. Sources: http://www.lexpress.fr/actualite/societe/sante/l-europe-inflige-une-amende-de-331-millions-d-euros-au-laboratoire-servier_1558138.html http://europa.eu/rapid/press-release_IP-14-799_en.htm http://www.challenges.fr/economie/20130902.CHA3557/amendre-de-94-millions-d-euros-pour-entente-sur-les-medicaments-generiques-le-labo-lundbeck-fait-appel.html Show less Reply Camille Willot 6 December 2014 The market for technology presents a lot of advantages (facilitates transfer, reduces transaction costs,…) but also some drawbacks (contracting can be sometimes very costly, or buyer and seller don’t find each other…). Therefore, we see that public intervention is needed in order to regulate this market for technology. I will base this post on the “European Commission Recommendation on the…Read moreThe market for technology presents a lot of advantages (facilitates transfer, reduces transaction costs,…) but also some drawbacks (contracting can be sometimes very costly, or buyer and seller don’t find each other…). Therefore, we see that public intervention is needed in order to regulate this market for technology. I will base this post on the “European Commission Recommendation on the management of IP in knowledge transfer activities and Code of Practice for universities and other public research organizations” from the 10th of April 2008 (Brussels). Here, we will see that the European Commission (EC) uses 2 different tools in order to regulate the market: a Recommendation to the member states and two Codes of Practice: one for the universities and public research organization directly, and one for the public authorities in order to regulate this knowledge management in the sector of universities and public research. First, the EC presents a recommendation list to the Member States, which recommands them notably to: ensure that all public research organizations define knowledge transfer as a strategic mission, encourage public research, support the development of knowledge transfer capacities and take steps to encourage open access to research results. They should also adapt their national legislation on basis of this recommendation, take steps to ensure the implementation of the Code of Practice, ensure equitable and fair treatment regarding the ownership of IP right and inform the Commission every two years of the measures taken. Second, the Code of Practice for universities and public research organization consists of three main principles: 1) The principle for an internal intellectual property – these organisms must build an effective management of the IP resulting of the collaboration of- or their own- activities. This is by: developing an IP policy, which would provide clear rules for staff and student, promoting identification, exploitation and protection of IP, giving incentives and promoting knowledge dissemination. 2) The principles of a knowledge transfer- focus more specifically on the active transfer and exploitation of IP. This can be done by: developing licensing policies, elaborating clear principles regarding the share of returns and taking in consideration the exploitation mechanisms and partners. 3) The principles for collaborative and contract research- concern all kinds of research conducted jointly by public and private organization, either by collaborative or contract research. This concerns mainly: the ownership of the IP, the access rights and the compatibility of each party. Third, the EC provides a list of practices that must be taken by public authorities in order to facilitate the transfer of knowledge in universities and public research organizations: the knowledge transfer must be part of the strategic mission of these organisms, there must be public policies in order to regulate them and sufficient resources, incentives and support must be given to the organisms. Moreover, there must be a coherence in trans-national cooperation, the dissemination of knowledge should be facilitated by open access to research data, publications etc. and finally, necessary mechanisms should be put in place in order to monitor and control the transfers of knowledge. As conclusion, I think that the EC, by producing this official Recommendation, and the two Codes of Practices, really tried to intervene and regulate this complicated market for technology. The Commission clearly encourages the member states to foster public research, support knowledge transfer and therefore take the appropriate measures in order to monitor it. Moreover, by this way, the EC ensures a certain unicity between the member states about the management of knowledge transfers. SOURCE: European Reasearch Area. (2008). Commission Recommendation on the management of intellectual property in knowledge transfer activities and Code of Practice for universities and other public research organisations. Online http://ec.europa.eu/invest-in-research/pdf/download_en/ip_recommendation.pdf consulted on the 4th of December 2014. Show less Reply Jan Sedek 6 December 2014 One obvious intervention comes to my mind and that would be simply subsidizing innovation. That has been put to practice in the past and it is somewhat functioning in the system. I can think of few possible ways to do this, but there are probably many. One way would be research grants. As this is happening all the time, especially in…Read moreOne obvious intervention comes to my mind and that would be simply subsidizing innovation. That has been put to practice in the past and it is somewhat functioning in the system. I can think of few possible ways to do this, but there are probably many. One way would be research grants. As this is happening all the time, especially in universities and research institutions, it probably doesn’t need any further description. Another way would be directly subsidizing small and medium businesses, which specialize on innovation. For example the government could set up a program in which only certain firms could enroll. One can think of many characteristics by which the government can distinguish between the desired targets of the program and the rest of the firms. For example not utilizing the innovation could be imposed as a legal condition of the firm. If it is proven that the firm violates the condition it gives back the subsidy and possibly pays some penalty. Moreover the government has the power to make this a criminal activity such as a fraud. This could further discourage cheating on the subsidy program. The government can also limit the size of the firm for example by setting a cap on annual revenues of the applicants. There are many possible interventions one could introduce. Government can set up a program which encourages big firms to cooperate more with universities. This can be done for example by tax deduction. Nevertheless one has to keep in mind that with every intervention comes a price. The intervention can distort the market in an unexpected way. Moreover legal environment may be damaged or the government can make a mistake which can lead to an arbitrage later. Show less Reply Julien Horlay 6 December 2014 According to me, the country who seems to be the most adapted is the United States of America. Why? Because they put in place “help services” for the firms that claim laws and rules regarding the transparency, the misuse, the updates and the checking of patents. In fact, sellers find with many difficulties their buyers or often trade might be unprofitable…Read moreAccording to me, the country who seems to be the most adapted is the United States of America. Why? Because they put in place “help services” for the firms that claim laws and rules regarding the transparency, the misuse, the updates and the checking of patents. In fact, sellers find with many difficulties their buyers or often trade might be unprofitable due to heavy licensing costs. However, concerning Europe, they put many institutions in place in order to answer those same needs. But it has not already been the case, it took a long time before having regulation in this field between all the different european countries. For instance, the Organisation for Economic Co-operation and Development focus on improving the technology market by highlighting many objectives such as a better diffusion of technologies and transparency, a decrease of patenting entry barriers … More locally in Wallonia, the local government decided, in 2004, many rules through the Plan Marshall such as gathering the firms into clusters regrouped by field of research (Biotech, green energy, …). This clarity gives incentives to firms to innovate seeing that they can do more easily business with companies that they have a lot in common with. As a consequence a strong network has been created, reducing their negotiating costs, and currently their only objective is to go forward. Sources: http://www.oecd.org/ http://www.steunpuntwse.be/system/files/overwerk_2005_4_07.pdf « Le plan Marshall: cinq actions prioritaires pour l’avenir wallon » Show less Reply Florent Dauvister 5 December 2014 Like many other booming markets, the patent marketplace is one where chaos reigns more often than order. Until fairly recently, patents were created by companies who intended on developing a new technology or product and filing a request for that patent to be give them an opportunity to make a return on their initial R&D investment. During the last 30…Read moreLike many other booming markets, the patent marketplace is one where chaos reigns more often than order. Until fairly recently, patents were created by companies who intended on developing a new technology or product and filing a request for that patent to be give them an opportunity to make a return on their initial R&D investment. During the last 30 years, patent marketplaces emerged and stayed unregulated for years, as always when it comes to technology, the authorities are lagging behind and are only now slowly looking into the issues inherent in the patent marketplaces. A few instances of well thought-out regulations and interventions have been implemented in a few European countries but we are yet to see the creation of a European-wide regulation putting an end to the abuse in the patent marketplaces. – In the UK, lawmakers wanted to create a Digital Copyright Exchange to offer a more efficient marketplace for owners and purchasers or right and to open up markets to creators who may not have previously been able to access them. – Denmark has taken its first step towards the creation of a real IP marketplace by creating a web-based portal named IP-Handelsportal which aims to facilitate cooperation and trade in IP. I personally believe that a well regulated stock-exchange-like marketplace for Intellectual Property is the right step to take. It can prevent abuses in prices, it would push patent creators to standardise the way the patents are presented to avoid huge costs related to understanding what a particular patent does, it would help centralise all the patents still available for purchase worldwide creating the perfect place where patent creators can meet patent purchasers. Aside from Europe, a few organisations have tried their best to create new patent marketplaces, for instance: – The World Intellectual Property Organisation, WIPO’s Green, a centralised entity hoping to enable environmental technology owners to make IP and known-how available to users through searchable public database of available property assets and resources – Re:Search, a similar WIPO-led consortium in the domain of research on treatments for neglected tropical diseases It is clear that IP marketplaces are a hot topic and actors of the industry are now are the centre of a huge discussion. On March 18-19, the Federal Trade Commission held the third instalment of its series of hearings on “The Evolving IP Marketplace.” Two big conclusions can be taken out of the hearings: Most big companies are inundated with offers to sell patents and are unable to intelligently analyse them, even companies whose main job is to innovate like 3M, Google, Exxon and many others. The discussion doesn’t only lie in the hands of the private sector, Jon Soderstrom of the Association of University Technology Managers said “Universities hardly ever practice their own patents and instead, face the decision between licensing technology to an existing company or starting their own company”. The message should be received loud and clear, a well regulated worldwide IP marketplace needs to be implemented as soon as possible before the costs currently put on the inventors prevent them from investing in creating or acquiring new IP. Show less Reply Alex Angelini 2 December 2014 The problem of enhancing the efficiency of the market for technologies is made incredibly complicated by the absence of clear-cuts and types in the field of technology and innovation, a problem that is inherent and pervasive: as we define innovation as "something new", we cannot expect it to fall into pre-existing categories by definition, and the same can be said…Read moreThe problem of enhancing the efficiency of the market for technologies is made incredibly complicated by the absence of clear-cuts and types in the field of technology and innovation, a problem that is inherent and pervasive: as we define innovation as “something new”, we cannot expect it to fall into pre-existing categories by definition, and the same can be said for the contracts related to it. Prima facie it would seem reasonable to suggest to “cluster” previous documents and contracts into categories in order to help the making of future contracts but I doubt that creating such “database” would change drastically the situation due to the huge amount of data it would contain and the specificity of every contract, the analysis of which requires additional time and costs, while not eliminating the risk of not finding the necessary “inspiration” (i.e. not finding an adequate model to follow for writing the contract in due time). Again, it could be tempting to decide to allocate subsidies in order to reduce the inherent costs of such contracts, but how in practice should these subsidies be allocated? a) To everyone that asks for them, disregarding the efficiency issue. But what if the contract is unnecessary or, even worse, fictitious? Of course some kind of regulation would be needed. b) The subsidy is awarded with a decision based on the “importance” of the contract, which reflects the importance (i.e. the beneficial effect) of the innovation. This kind of subsidy is, by necessity, awarded ex-post and thus its relevance must obviously be discounted by the probability of obtaining it. Even more, since the probability of obtaining the subsidy is directly correlated in this case with the probability of a successful innovation, in truth this kind of subsidy would not help at all to resolve the initial uncertainty problem on the profitability of signing a contract, because it would simply state what is plainly observable (i.e. if the contract was a good investment when it is already clear it was.) c) The subsidy is awarded following a regulation that takes into consideration only procedural elements and not substantial elements related to the profitability of the patent. This seems the most reasonable and auspicable solution, but since it doesn’t depend on the magnitude and importance of the contract, it is probably incapable to increase the incentives to make contracts in a balanced way, which is exactly the same problem as with patents themselves, with the one-size-fit-all duration always too long or to short to enhance efficiency in the correct way. In short, in my opinion there is no “simple allocative solution” that could resolve this problem in one move, and there is also a strong trade-off between intricacy of the solution proposed and the increased costs/reduced benefits of it. What I would suggest is, from a broader perspective, to use education in order to increase the social interest on the topic of patents and related contracts and to form not “a cluster of documents” only, but a sub-culture of specialists that is formed directly at the university level on IP studies which are for now – to the best of my knowledge – mostly accessible only at the Master level or above. Show less Reply AKASHDEEP SRIVASTAVA 27 November 2014 Patents provide two types of rights: exclusivity and transferable rights. While the benefits of the former are clearly evident with firms getting exclusive rights to use the invention to reap economic benefits and gain competitive advantage, the benefits of the latter can be best achieved if there exists an efficient market for the sale and transfer of technology. It is thus…Read morePatents provide two types of rights: exclusivity and transferable rights. While the benefits of the former are clearly evident with firms getting exclusive rights to use the invention to reap economic benefits and gain competitive advantage, the benefits of the latter can be best achieved if there exists an efficient market for the sale and transfer of technology. It is thus important for all parties to help in improving the development and functioning of this technology market. One step that can be taken in this direction is the creation of an information system containing the details of the patents filed & approved by the various patent offices. There could be voluntary sharing of information by the innovators; only the parties interested in sale or transfer of IP rights would thus be active in the system and this would act like a marketplace for easy and cost-effective sale and transfer of technology. The information system could contain laws, regulations and guidelines for the sale/transfer of technology under different category heads leading to significant reduction in transaction costs (negotiations, contracts etc.) due to standardization and automation of the process. Another step that could be taken is setting up of an efficient arbitration system for settlement of disputes in IP laws. The disputes become too expensive due to the legal proceedings and the technical expertise of the judiciary could also be questioned by the affected parties. Arbitration reduces the legal costs to a minimum and the judge is chosen by the parties so that the technical expertise is not an issue. There could also be pre-decided members for different categories thus setting up a standard market for settlement of issues. WIPO works in this direction with an added advantage of promoting cooperation among different parties with the objective of economic and social development. A similar institution could be set up for a country (different cultural, political and business context) with more stress on economic benefits for the firms, and thus for the society. These steps could significantly promote development and functioning of markets for technologies. Show less Reply Sruthi Chekuri 26 November 2014 It is evident that patents play a major role in helping ensure that technology is developed and used efficiently by creating exclusivity and transferable rights. They promote vertical separation and specialization and help avoid duplication of efforts. In effect, they have created a market for technology. But like all markets, it is beneficial only when it is efficient. A market…Read moreIt is evident that patents play a major role in helping ensure that technology is developed and used efficiently by creating exclusivity and transferable rights. They promote vertical separation and specialization and help avoid duplication of efforts. In effect, they have created a market for technology. But like all markets, it is beneficial only when it is efficient. A market is more efficient when it has a large number of participants i.e., buyers and sellers. This is limited in the market for technology because of asymmetry of information about existing patents and their applicability. Public authorities can counter this by creating a transparent, regularly updated platform with information publicly disclosed, perhaps at a small fee to compensate for its cost. The growth of the U.S. economy during the 19th century was characterized by a dramatic increase in innovations and specialized inventors. Laws stimulated the diffusion of technology at this time through public disclosure. Patents with their detailed specifications were required to be provided to the Patent Office, which maintained a central storehouse open to all. Another barrier to an efficient market is the lack of a strong legal environment which can enforce the patent rights. Patent wars are expensive and have become more common. They particularly are more damaging in developing countries with weak and long legal processes. The U.S. Patent Act adopted a rigorous examination system where applications are diligently scrutinized by trained people to ensure that the invention really is deserving of a patent. This decreases the number of patents issued in the first place and eases their enforcement in legal courts. Such laws can alleviate concerns about the validity of patents and encourage more participants in the market for technology. Show less Reply Hélène Linsmeau 25 November 2014 On this topic, the United States has better progressed because they created a support for companies which are asking a patent and some rules against a wrong use of patents as well as the validation, the complains verifying, the updates of information… and also the obligation to show everything concerning the patent, to be transparent. The market of technology is one…Read moreOn this topic, the United States has better progressed because they created a support for companies which are asking a patent and some rules against a wrong use of patents as well as the validation, the complains verifying, the updates of information… and also the obligation to show everything concerning the patent, to be transparent. The market of technology is one of the main current concerns of the European government. The Organisation for Economic Co-operation and Development (OECD) confirm this need of improving the Technology market. According to them, there are several advantages to create a transparent market of IP, and they go even further by claiming that the licensing agreement “ increases the diffusion of technologies and avoids duplication in R&D. From an economic point of view the licensing lowers entry barriers, promotes optimal division of industrial activities and facilitates the use of a technology on a large scale. Finally, it is a source of income and thus funding for research. » (http://www.innovation-economie.com/marché-des-brevets-patent-market/le-rapport-the-report/) In the past, the research for patents in Europe was really difficult due to the fact that none unified jurisdiction was created between European countries. Indeed, there was several databases which mentioned information about granted patents, some operated by the European Patent Office (EPO) and others by national patent offices. For example, either an inventor might file a patent at EPO. This was applied in reality in the countries mentioned in the file and after it has been validate by this(ese) concerned country(ies). Moreover fees were imposed to the company for each country getting the patent. Either, he might apply for a patent nationally (in his home country or even in several countries too); so, the application concerned the national patent office(s). But the increasing needs and concerns by the government leads to progress. Thanks to the introduction of the unitary European patents which are operative since January 2014, the intellectual property is significantly improved. Indeed, the patent application is now simplified and cheaper. Another big change is that the patent protection is ensured automatically in all countries which took part to the agreement, this without any needs for subsequent validation with the national organizations. The implications of this centralisation of patent file will lead to a better management of patents and so and easier research about existing patent and a more transparent market of technologies. To sum up, improvement are needed in the purpose of creating a useful market of technologies in which transparency, an better understanding of technologies which already exists and a support to file a patent will permit the promotion of innovations. Referenced used: http://www.keepeek.com/Digital-Asset-Management/oecd/science-and-technology/knowledge-networks-and-markets_5k44wzw9q5zv-en#page3 http://www.ftc.gov/sites/default/files/documents/reports/evolving-ip-marketplace-aligning-patent-notice-and-remedies-competition-report-federal-trade/110307patentreport.pdf http://ec.europa.eu/internal_market/indprop/docs/rights/2008_0465_fr.pdf http://ec.europa.eu/enterprise/policies/innovation/files/swd-2012-458_en.pdf http://www.pubaffairsbruxelles.eu/fr/francais-resume-debat-peut-on-creer-en-europe-un-marche-des-brevets-transparent-et-securise/ http://convention-s.fr/decryptages/brevets-européens-enfin-unis/ Show less Reply Dernicourt Anthony 25 November 2014 What the EU (and other governments) could simply do is trying to give subsidies in order to reduce these negociating and writing licences costs. So at first make the unprofitable potential technology sales profitable. For each firm ready to try to get a technology using a license with an innovator, the EU should give a financial compensation to those costs.…Read moreWhat the EU (and other governments) could simply do is trying to give subsidies in order to reduce these negociating and writing licences costs. So at first make the unprofitable potential technology sales profitable. For each firm ready to try to get a technology using a license with an innovator, the EU should give a financial compensation to those costs. So the incentive to get the technology from an external innovator will be stronger, and the incentive to sell the technology will be also stronger ofr the innovator himself. The EU already tries to encourage innovation, with for example the objective of each member country to invest 3% of their GDP in R&D for 2020. So why not investing in market technology instead, in order to avoid waste of time and money for innovators that are less able to launch their innovation on a market (and at the same time, seeing firms invest in too much R&D without a concrete result). Furthermore, the tax system could be adapted for the licence costs. If those licences are lesse expensive, firms will have more incentives to use it. Again, as EU member countries agreed on the innovation development, each country can try to make the licensing systme more attractive. But everything has a cost… Finally, the EU should encourage a technology market in all the european countries, allowing firms in every country to collaborate with foreign innovators and the opposite too. Trying to connect innovators and firms together. There are many ways to manage it. Organizing european corporate meeting (subsiding it), develop programs between universities and firms accros the whole EU, etc… All of this is also valid outside of the EU. Show less Reply nsiangani Tatiana 20 November 2013 I would like to comment about the « dark side » of patent use. Market interactions, characterized by the acquisition decisions of the diﬀerent ﬁrms, generate a dynamic system where, small and large ﬁrms hold portfolios of patented inno- vations of diﬀerent qualities. Sometimes ﬁrms acquire patents not to use technology, but to block competitors and stiﬂe follow-on innovation. More…Read moreI would like to comment about the « dark side » of patent use. Market interactions, characterized by the acquisition decisions of the diﬀerent ﬁrms, generate a dynamic system where, small and large ﬁrms hold portfolios of patented inno- vations of diﬀerent qualities. Sometimes ﬁrms acquire patents not to use technology, but to block competitors and stiﬂe follow-on innovation. More and more, large companies are clearly using patent portfolios as a new weapon in various strategic contests, most notably in the mobile phone industry. Patent market is becoming just a new move in the same old competitive battle. In that conditions. I don’t think there will be postive effects on innovation in the long run, and on society in general. Sources: http://www.mediainstitute.org/IPI/2012/051712.php Show less Reply Shan Liu 20 November 2013 My example is about patent legislation in the high-tech issues in US. In 2011, the Leahy-Smith America Invents Act (AIA) was initiated. The AIA put in place mechanisms for post-grant review of patents and other reforms to boost patent quality. In addition, court decisions clarifying the scope of patentability and guidelines implementing those decisions diminish the opportunity to game…Read moreMy example is about patent legislation in the high-tech issues in US. In 2011, the Leahy-Smith America Invents Act (AIA) was initiated. The AIA put in place mechanisms for post-grant review of patents and other reforms to boost patent quality. In addition, court decisions clarifying the scope of patentability and guidelines implementing those decisions diminish the opportunity to game the patent systems. However, innovators still face challenges from entities who develop a business model “to leverage and hijack someone else’s idea and extort benefits out of them.” On June 4th, 2013, the White House announced issued five executive actions designed to protect innovators from frivolous litigation and ensure the highest-quality patents in patent system. The Administration announced a number of steps to bring about greater transparency to the patent system. In these action plans, the patent office started to require patent applicants and owners to regularly update their ownership prior to the proceeding of patents. By doing this, the patent office better controls the patent or application. The PTO also provided targeted training programs to the examiners on the scrutiny of functional claims and developed strategies to improve claim clarity, for example, by creating glossaries which include patent specifications to help the examiners in decision makings where highly sophisticated technologies are involved. Furthermore, the Administration encourages more engagement with the shareholders, including the patent owners, the research institutions, and the end-users, public-interest groups, and the general public. Following this, a set of out-reaching programs were initiated. For example, a 6-month events across the country to develop new ideas and consensus around updates to patent policies and laws were organized. Also, an expansion of scholar program were introduced, bringing in academic experts, and allowing the public to get access to robust research data regarding key litigation issues. The patent office together with the trade commission held several rounds of workshops and roundtables among innovators and interested groups in 2012. These kinds of activities provides valuable input to the legislation process itself but also facilitates the information flow among the innovators. Reference: http://www.whitehouse.gov/sites/default/files/docs/patent_report.pdf Show less Reply De Kock Boris 20 November 2013 It’s difficult to find an example of public intervention for make the patent market more liquid. There exist against privates initiatives to fight against the patent troll and improving the patent market. I think to some firms as Allied Security Trust (AST). It is a firm composed by many actors of the IT Sector (Intel, Google, IBM, Philips…) that buy…Read moreIt’s difficult to find an example of public intervention for make the patent market more liquid. There exist against privates initiatives to fight against the patent troll and improving the patent market. I think to some firms as Allied Security Trust (AST). It is a firm composed by many actors of the IT Sector (Intel, Google, IBM, Philips…) that buy patent that they need and emit license before selling (catch license and release). These licenses are perpetual, irrevocable, worldwide and non-exclusive. This mechanism does not immobilize patents and patents protect against the troll. As regards public intervention, I don’t know if this is really relevant, but the White House has recently taken measures to fight against the troll. It is primarily transparency measures for these firms and impose the plaintiff in a abusive lawsuit to pay a legal costs if he loses. This isn’t acting directly on the patent market but it could indirectly make it more liquid its fight firms that hinder it. Sources: http://sites.uclouvain.be/econ/Regards/Archives/RE083.pdf http://www.ipdigit.eu/wp-content/uploads/2010/12/M%C3%A9moire-Laurent-Slits.pdf http://www.lemonde.fr/technologies/article/2013/06/06/la-maison-blanche-s-attaque-aux-trolls-des-brevets_3425548_651865.html Show less Reply De Temmerman Yann 20 November 2013 In this comment i chose the India’s war on intellectual property rights. In this country (which is one of the last in terms of protecting intellectual rights) patents aren’t always respected and one of the consequences is that some companies invest millions of euros in R&D without have any return. On average the development of a new drug take…Read moreIn this comment i chose the India’s war on intellectual property rights. In this country (which is one of the last in terms of protecting intellectual rights) patents aren’t always respected and one of the consequences is that some companies invest millions of euros in R&D without have any return. On average the development of a new drug take 10 to 15 years and has a cost of $1 billion. So if a firm spend so much money they have to obtain a patent to prevent the manufacture of cheaper generics But we know that companies have to continue to invest money in R&D to innovate. There is really a problem about the pharmaceutical patents because the Indians can not buy the patented drugs. There are so expansive and people needs to product his own range of generic. Therefore the Indian government reacts and tries to cancel some patents. For example, indian government would revoke the patents on the drug “Herceptin” (a breast-cancer drug) which was under protection until 2019 and others on drugs of companies like “Pfizer”,… The government fights against the production of generics drugs which are not legal because there are onder patents … and also to secure the people. source : http://www.forbes.com/sites/sallypipes/2013/09/16/indias-war-on-intellectual-property-rights-may-bring-with-it-a-body-count/#b015aa Show less Reply Massot 20 November 2013 I think that the only thing that could be done would be to create a similar system as the stock exchange market. If a specialized institution was created regrouping buyers and sellers, it might simplify and reduce these costs. If think that in Belgium the office of intellectual propriety should assume this role and organise the sale. Companies who choose…Read moreI think that the only thing that could be done would be to create a similar system as the stock exchange market. If a specialized institution was created regrouping buyers and sellers, it might simplify and reduce these costs. If think that in Belgium the office of intellectual propriety should assume this role and organise the sale. Companies who choose to patent something and register in that office would then have the choice to keep it or sell it. All patents would then be published and potentiel buyers would be aware of the existing opportunity. They would just have to place a bid. The reason why I think this kind of institution should be public is to avoid a perverse situation where a system would develop only on the sale (like the stock exchange) and thus having more and more people speculating on the patents worth. I would like to rebound on something that an other student said. In his argument, he doesn’t agree with what Pluvia-Zuniga and Guellec said stating that this kind of system will have a negative effect on the entry barrier reduction because small companies might not have the necessary funds to invest. I do think that with a clearer system companies might be able to cooperate together to find the funds. The same way a company could be owned by several companies which alone couldn’t afford it, the patent could be shared between several companies which would equally benefit from the technology. I agree with Pluvia-Zuniga and Guellec when they say it will lower the entry barrier because it’s true that R&D costs a lot of money and in many expect could be considered as a profession on it’s own. The reason is that people are good to innovate and create, others a good to produce and finally some are good to sell. I think each has to center on its core business and they will become more efficient. This will enable to reduce costs as a whole. Show less Reply Luís Cabral 20 November 2013 Any underdeveloped market has high transaction costs that are even higher for technology, given all the existing uncertainty about the assets. Also, transaction costs are normally lower if the market is standardized and if there is high liquidity. Hence, governments could try to organize this market in some way, starting probably by asking universities to have a portfolio of patents…Read moreAny underdeveloped market has high transaction costs that are even higher for technology, given all the existing uncertainty about the assets. Also, transaction costs are normally lower if the market is standardized and if there is high liquidity. Hence, governments could try to organize this market in some way, starting probably by asking universities to have a portfolio of patents and other IP rights ready to be seen by any potential buyer (of the patent or just the license). These portfolios should be available in some online platform, in order to create a better match between buyers and sellers. Another event that does not contribute to the efficiency of the technology market is companies/other entities holding “inactive” patents to keep competitors away. Governments should encourage these entities, which have been holding inactive IP rights for a certain number of years, to either use it or sell it. This way others would be given the chance to make use of the patent and explore some opportunity. This type of patents could even be sold at discount. The government’s role would be creating some institution to put these unused patents into a secondary sale or at least enabling interested parties to make offers to companies who hold it. In addition, the process of buying/selling a patent should be standardized and simplified as much as possible. Show less Reply Defoy Gilles 20 November 2013 If there are functioning problems with the market, this one has to evolve to something which fits better. In this case, the problems, are first : the sellers and the buyers can’t find themselves, second : there are costs which sometimes made the trade unprofitable. It’s easier said than done but we just have to settle a way to gather…Read moreIf there are functioning problems with the market, this one has to evolve to something which fits better. In this case, the problems, are first : the sellers and the buyers can’t find themselves, second : there are costs which sometimes made the trade unprofitable. It’s easier said than done but we just have to settle a way to gather all those kinds of firms and make them negotiating even before the creation of any kinds of innovation. In this way, they could save time and money. In fact, they just have to move in their relationship : stopping having this buyer-seller relationship and starting being partners. That’s something, the Walloon government decided to encourage in 2004 with the settlement of the local Marshall Plan. This is a plan to improve the Walloon economy. Concerning the firms, the public authorities gathered them into clusters. Those clusters are about different business fields : logistics, green technology, biotechnology, agribusiness… Such clusters could be defined as a partnership between firms and private and public research centres aimed to create innovative projects. Thanks to this plan, firms now work for one other. It allows them to find themselves more easily and to be on a same business level. Now, their goal is to move forward together and no more at the expense of the other. In this way, we can suppose that negotiating costs are lower than usual too. Show less Reply Cibuabua Yves 20 November 2013 To improve the market of technology, we can argue that helping the entry in the downstream market could be a good idea, but the problem is that in the upstream part, firms invest in R&D and with the excludability and transferability can deter the entry. Firms wanting to enter the downstream market must invest in high sunk cost of…Read moreTo improve the market of technology, we can argue that helping the entry in the downstream market could be a good idea, but the problem is that in the upstream part, firms invest in R&D and with the excludability and transferability can deter the entry. Firms wanting to enter the downstream market must invest in high sunk cost of R&D or buy the right to use the patented technology of an upstream firm. Some countries, such Sweden find the way to increase the efficiency of this market. I’m talking about Swedish Competence Centers, which aggregate three partners, Industry University and State. To create and strength R&D networks the State subsidizes around two third of the total amount the link between Industry-University, this way they promote innovation and are sure of the efficient use of resources, and avoid wasteful duplication of existing technologies. http://www.vinnova.se/upload/dokument/Verksamhet/Starka_FoI-miljoer/Kompetenscentrum/NUTEK%20CC%20Programme%20Feb00%20memo.pdf http://www.technopolis-group.com/resources/downloads/reports/419_V-Centres_published.pdf Show less Reply Marie KHAMPHANH 20 November 2013 In the markets for technologies, public interventions are necessary. Indeed, local governments take measures in new technology sectors (green cars, nanotechnologies) but also in sectors that require huge investments to ease transactions between the buyers and the sellers (basic research, aeronautics). A public institution has been created in France, Oséo which allocates subventions and loans. Oséo is…Read moreIn the markets for technologies, public interventions are necessary. Indeed, local governments take measures in new technology sectors (green cars, nanotechnologies) but also in sectors that require huge investments to ease transactions between the buyers and the sellers (basic research, aeronautics). A public institution has been created in France, Oséo which allocates subventions and loans. Oséo is a state-run company which supports small or medium firms by financing investments with banks, guaranteeing them and stimulating technologic innovation. One of the main subvention is named “subvention for the creation of innovative firms” designed for French entrepreneurs. Oséo helps the company financing a commercial or a marketing feasibility study and provide a legal aid. There is a “subvention for innovation feasibility” too. This aid aims at innovating and preparing R&D projects (feasibility study). It assists firms to know if their departments (marketing, management, commercial) are efficient. Then, the” subvention for technological partnership” has been created to boost collaborative projects between companies. Furthermore, the “subvention for innovation development” allow small and medium firms to realize and develop an innovation before its commercialization. Oséo participate in these projects by proposing a refundable advance if the companies succeed and a zero rate loan. It also offers guarantees and loans to innovative companies. With the innovation development contract, it permits to grant small and medium companies with loans without personal guarantee and financial security. This loan allows financing intangible investments and the working capital for an innovation or a modernization program. It’s given to small or medium companies which are eager to conquer new markets and implement new communication process (in their products or services). There’s also a zero rate loan for innovation for companies which have an innovative project. In markets for technologies, state’ intervention is mandatory to keep its domestic growth but also to remain competitive in the global scale. http://www.journaldunet.com/management/expert/54744/oseo—quelles-sont-les-aides-aux-entreprises-innovantes.shtml Show less Reply Yasuhiro Minami 20 November 2013 I am not sure whether this example is correct or not for public intervention. But I think this is good for thinking about patent right. In Japan, from 2002 the previous prime minister Koizumi start to emphasize the right for intellectual property. And in 2005 intellectual property high court was established. This means that the governments tried to protect the…Read moreI am not sure whether this example is correct or not for public intervention. But I think this is good for thinking about patent right. In Japan, from 2002 the previous prime minister Koizumi start to emphasize the right for intellectual property. And in 2005 intellectual property high court was established. This means that the governments tried to protect the right for intellectual property. And now for accomplishing its mission, the court has some powers which ordinally courts don’t have. The court deals with the problem of intellectual property including patents’ problems and inform about the situation or rule in Japan regarding patents, intellectual property. Thanks to this court, not only Japanese firms but also other countries’ firms are able to get the information easily and make success their strategies of innovation or technology. In this case, I think, public authorities make intervention indirectly and this results in helping acceleration for innovation. In this way, we can say that intervention have good impact on patents’ work because the public authorities make the reliability for patent better. I also think that it is true that patents have the aspect of transferrable right but we should remember they also have the aspect of exclusive rights. I mean that public authorities make the aspect of exclusive rights larger than the other one, because for private firm, the certification from public is the best reason for their activities. So, I am worry about the market inflexibility by over-public intervention. Source: http://www.ip.courts.go.jp/index.html Show less Reply Taelemans Charles-Edouard 20 November 2013 I would like to comment about the pharmaceutical market because it is the market which really needs a public intervention because it’s one of the market that gives us the more of incentives to patent an invention but also the more of incentives to circumvent the law for many unscrupulous companies. We can find three major reasons for that: Firstly, the fixed…Read moreI would like to comment about the pharmaceutical market because it is the market which really needs a public intervention because it’s one of the market that gives us the more of incentives to patent an invention but also the more of incentives to circumvent the law for many unscrupulous companies. We can find three major reasons for that: Firstly, the fixed costs of R & D are huge and bring a lot of significant indivisibilities. Secondly, the length of the R & D and the requirement to obtain government approval for any new molecule gives a lot of uncertainty (is it safe, does the molecule already exist? …) Finally, knowledge is more scientific in the pharmaceutical sector than in any other one, imitation is easy to create and furthermore costs are low, therefore, spillovers are important. Now, I would to go further in the third point and for that I will explain the battle between Novartis and the Indian government in the Glivec patent case. Novartis has filed a patent application in India for an anti-cancerous (Glivec). In countries where Novartis had obtained a patent, Glivec was selling at U.S. $ 2 600 per patient per month. In India, there were in 2006 for generic versions of Glivec for less than $ 200 / patient / month. Novartis has filed a patent application in order to sell Glivec in higher prices in India. This patent application was rejected in January 2006 by the Indian Patent Office because that this was just a variant of an old medicine. a judgment highly criticized by pharmaceutical companies (and it’s normal because they did a lot of R&D and like it was said in the first point, R&D is very costly) point but praised by public-health activists, who said it would protect India’s ability to make inexpensive generics for the developing world (once again this is a correct point of view). We saw here in this case a public action about the patent in the pharmaceutical field but it is clear that we need a more precise regulation for those type of cases, how does state should decide between public-health and innovations, do we have to give subsidies for the loss of Novartis but keep the generic? I think that those questions are important and that we have to think about that. Source: http://www.cairn.info/revue-reflets-et-perspectives-de-la-vie-economique-2006-4-page-23.htm (Paul Belleflamme, Tanguy van Ypersele) http://online.wsj.com/news/articles/SB10001424127887323296504578395672582230106 Show less Reply Francesco Battino 20 November 2013 The environmental economy (commonly known as Green Economy) is one of the field of research which is mostly influenced by the public authority decisions around the world. With awareness of the pollution problem, the EU was the first one to implement a new system in 2005, the first and the biggest emission trading scheme in the world (Australia implemented a…Read moreThe environmental economy (commonly known as Green Economy) is one of the field of research which is mostly influenced by the public authority decisions around the world. With awareness of the pollution problem, the EU was the first one to implement a new system in 2005, the first and the biggest emission trading scheme in the world (Australia implemented a similar system afterword). The project, started in 2005, for the European Union Emission Trading System (EU ETS) is now the biggest pillar of the EU climate and environmental policy, and was created to respect the Kyoto’s agreement in environmental matter, with the reduction of the CO emission in EU by 21% in 2020. At a glance, the ETS is a a project which set a “cap and trade” system, under which the countries of the EU can produce a certain quantity of greenhouse gas every year (cap). At the end of the year, the countries which produced less quantity of greenhouse gas can sell their quota to countries which have consumed more of their “initial” quota (trade). If you don’t get those quota, you will pay an heavy penalty to the UE. Now, the question is: what is the connection between innovation and the EU ETS? The connection is in the economic growth in production of power generation technologies which was caused by the introduction of the EU ETS. The introduction of a market for the pollution (which value is worth millions of Euros) is a strong inducement to develop new technologies which grant the production of less greenhouse gas. The over twelve thousand industries and power plant in the project all needed the development of new technologies, with subsequent races for the production and the implementation of those new technologies from numerous firms in the pollution control devices, as dust collection systems, dissolved air flotation (DAF) and powdered activated carbon treatment and vapor recovery systems. This higher demand of most efficient way to control pollution have reflected strongly on the investment in R&D from firms which produced such devices, and this is I think an important, example of indirect influences of public authority in the innovation field. In the last few years, numerous papers about this connection have been published, proving the impact of this regulation on the innovation field. I think important papers is this field are the one from Karoline Roggae and Volker Hoffman which studied this phenomena in Germany, and the one from René Kempa, and Serena Pontoglio which studies the general environmental economy problem. Sources: http://www.sciencedirect.com/science/article/pii/S0921800911003909 http://www.econstor.eu/dspace/bitstream/10419/28521/1/61067661X.pdf Show less Reply XIEWEN YU 20 November 2013 I searched the Internet to find some examples of government patent intervention and found that American Government and European Government did a lot of efforts in pretending the certain commercial action called "patent roll". It is a action caused by the technology market which refers to certain company earning money by suing others' infringement acts instead of earning profits…Read moreI searched the Internet to find some examples of government patent intervention and found that American Government and European Government did a lot of efforts in pretending the certain commercial action called “patent roll”. It is a action caused by the technology market which refers to certain company earning money by suing others’ infringement acts instead of earning profits from producing products from technology patent they have already got. This act is caused by the technology market and cost a large amount of time and labor of government to pretend. In the USA, the cases of ‘patent roll’ increase from 29% to 62% from 2010 to 2012. It is negatively impacted the overall development of social innovation. The first case of America is about eBay in 2006. Government made a lot of laws like’ Bad Faith Assertions of Patent Infringements’ to prevent certain situation. Same situation happens in European governments. Certain examples like Nokia vs IPCom, Google vs Nokia as well as Microsoft vs Masaid . Facing with that , it is important for government to do such protection in appropriate time and situation. Without interrupting the normal order in the economy market, governments need to control the development of social ,technology and economy. The technology market is a long way for governments to run appropriately. Show less Reply Georges Cyprien 20 November 2013 It seems very clear that markets for technologies do not work the same way as a normal commodity market. The main issue in this kind of markets is the latent uncertainty behind it, but also very high transaction costs. In fact, the uncertainty comes from the fact that the nature of knowledge in itself is very uncertain. Knowledge is very…Read moreIt seems very clear that markets for technologies do not work the same way as a normal commodity market. The main issue in this kind of markets is the latent uncertainty behind it, but also very high transaction costs. In fact, the uncertainty comes from the fact that the nature of knowledge in itself is very uncertain. Knowledge is very tacit, it’s not easy to define property rights and the value of technology is thus often very hard to assess. Furthermore there is also uncertainty in competition : the firm which want to buy a patent (a technology) might be afraid that a competitor could find a new (better) innovation. This is why in this sort of markets, it is more efficient to have intermediaries. These companies have different roles which results in different services. It can be assessing the quality of a technology; identifying the right partners and matching them, but also creating trust between upstream and downstream firms. Considering all of this, I think that authorities should try to deliver policies which encourage the development of these intermediaries, especially in their role of matching upstream firms with the right downstream firms. In fact, the main problem according to me is the lack of information of the downstream firms which prevents them from “daring” to buy technologies, which implies that there can be good quality technologies which are not sold at the end of the day. I would also like to speak about the so-called “bandwagon effect” which applies quite well here. This public economics concept is a way to explain why companies (and society in a more general way) can be stuck in low-quality standards, in a permanent way. If, in an industry, only one firm uses a technology (which might be better than the one used by other firms), but that it ends up providing a good that consumers don’t understand, or find too difficult to adapt to, this new technology might not break through, even though it would’ve been better for everyone. We need to take into account the fact that we need a sufficient number of potential consumers to make the use of a technology profitable. All of this might also be an explanation of the fact that firms way seem reluctant buying new technologies (or at least less than we could expect). This raises the uncertainty and thus the risk. This is why I think a good policy for such a concern could be to encourage the use of better technologies by helping them to spread, or by informing the consumers about the perks of the innovation, etc. http://ec.europa.eu/dgs/jrc/downloads/files/kt2010/201011_kt_presnetation_prager.pdf Show less Reply Rubens Moura 20 November 2013 The existence of substantial negotiation costs was pointed out in the text of the blog as determinant factor for determining a fearful behavior of firms by negotiation of patent exchanges. Planeta Sustentável (2010) suggests that the juridical services usually hired by firms to set the contracts needed on these deals are the main source of those expenses. In this context,…Read moreThe existence of substantial negotiation costs was pointed out in the text of the blog as determinant factor for determining a fearful behavior of firms by negotiation of patent exchanges. Planeta Sustentável (2010) suggests that the juridical services usually hired by firms to set the contracts needed on these deals are the main source of those expenses. In this context, there is little doubt that, in countries on which the legislation system is rather complex, there is a role for Government acting by striving for a more transparent and simple laws regarding patent exchange issues. Naturally, a profound reformulation on a juridical system is a lasting and costly process. Another feasible alternative that could be implemented by governments for softening the impacts of negotiation costs would be the creation and the promotion of online platforms through which firms could trade their intellectual properties, such as the mechanisms existing in a common stock market. The good news is that, in real world, they already exist on basis of a “green patents” market. I will broadly describe about its operations in the following lines. Founded in 2010 by Nike, Creative Commons and Best Buy, GreenXchange is an online system which intends to “accelerate and scale sustainability-innovation through sharing intellectual property assets” (GreenXchange) by enabling companies to trade with each other their “green knowledge”. Being more specific, one can mention the example of Nike which has the possession of a patent called “Environmentally Preferred Rubber”, a production technique used on the manufacturing of sport footwear which grants a 96% reduction of toxins production in comparison to the traditional method of rubber production. There would be a clear environmental gain by allowing this technology to be incorporated by other companies of the same sector or even in others that utilize rubber as an essential raw material (bicycle tires, for instance). From the exposed, encouraging firms to participate into these online tradable markets seems an interesting way for justifying governmental interventions. However, it is not needless to highlight that in order to guarantee the proper functioning of this market, governments must ensure that firms are providing reliable information about the quality products supplied. References: http://www.greenxchange.cc/ http://planetasustentavel.abril.com.br/noticia/desenvolvimento/empresas-troca-bolsas-online-sustentabilidade-exame-590726.shtml?func=1&pag=0&fnt=14px Show less Reply Julien van Cottem 20 November 2013 A very free market of technologies with the patents and license playing the role of stock actions is probably the best way to increase the transferability of tech. That transferability, as said in the article, is very important to allow all the actors of the society to enjoy a new technology. And not only some companies that can have a…Read moreA very free market of technologies with the patents and license playing the role of stock actions is probably the best way to increase the transferability of tech. That transferability, as said in the article, is very important to allow all the actors of the society to enjoy a new technology. And not only some companies that can have a kind of exclusivity on an innovation. But every market has its danger. Like the financial market has the speculators wha have proven to be the cause of big problems for banks, the tech/patent market have what is called the Patent Assertion Entities (PAE) or called by critics patent trolls. « Patent Assertion Entities (PAEs), called patent trolls by critics, are companies that typically do not invent or manufacture products but instead buy or license patents from others, primarily for the purpose of obtaining licensing fees or filing infringement lawsuits. » These companies are a real problem in the market of technologies. In addition to the heavy cost of licensing fee or the price of litigation around a patent, all due to these PAEs, there are abusive lawsuits on what can be called “basic ideas”. PAEs go after small and medium sized firms because they use things like a shopping cart. It is more than important that regulation comes from public authorities in order to cut off such abusive use of patents. In the US, as a response and very recently, they introduce “The Innovation Act” that “aims to increase transparency and accountability in the patent litigation system.” It proves that the market of technology is a real concern (at least in the US). To meet the good effect of the transferability, government should at least control and watch over the market. For example, decreasing the time and difficulties of the negotiation over a patent can diminish the transaction costs. And, they can achieve that by a standardisation over the transaction of a patent. As the Innovation Act, institutions can regulate the market with compulsory action (like give back an adapted and legal accountability) for any firms that trade intellectual property. http://www.reuters.com/article/2013/10/29/us-usa-patents-hearing-idUSBRE99S0YN20131029 Show less Reply Delinte Jérémy 20 November 2013 Technology transfer agreements are ruled by the European Union competition rules. I mean by technology transfer agreements all agreements that transfer intellectual property rights. Although such agreements have positive economic effects like those related in this article, there are some anti-competitive purposes that European Union competition rules take in account in a block exemption. For example, two competitors could use a…Read moreTechnology transfer agreements are ruled by the European Union competition rules. I mean by technology transfer agreements all agreements that transfer intellectual property rights. Although such agreements have positive economic effects like those related in this article, there are some anti-competitive purposes that European Union competition rules take in account in a block exemption. For example, two competitors could use a licensing agreement to share out markets between themselves or an important licence holder could exclude competing technologies from the market. The block exemption sets up by the European Union distinguishes between competing and non-competing companies. We can find that: – For competitors, if the combined share of companies implied in a technology transfer agreement does not exceed 20% and if the agreements do not contain anti-competitive restraints, then EU consider this agreement as benefit both for producers and consumers; – For non competitors, combined share of companies implied in the technology transfer should not exceed 30% and does not contain anti-competitive effects. In addition, agreement should not contain restrictions that have anti-competitive effects. Finally, the Commission allows European countries authorities to withdraw the block exemption explained above if there are particular characteristics in a distinct geographic market. Reference: http://europa.eu/legislation_summaries/internal_market/businesses/intellectual_property/l26108_en.htm#KEY Show less Reply Jori Sihvonen 19 November 2013 I agree that government intervention is necessary to improve the market for technology. I would like to point out two cases: compulsory licensing of patents set by law and research organizations. Compulsory licensing set by law is a good example of public intervention to the property right issues. This speeds up technological development and increases social welfare. An example is an…Read moreI agree that government intervention is necessary to improve the market for technology. I would like to point out two cases: compulsory licensing of patents set by law and research organizations. Compulsory licensing set by law is a good example of public intervention to the property right issues. This speeds up technological development and increases social welfare. An example is an issue which we have been talking about previously, Malaria medicine, and licensing it to developing countries. This increases social welfare and well being drastically in developing countries, but the companies also need to make a profit, to cover development costs. The dilemma is commonly solved through compulsory licensing, as the real price of the production license or drug would be too high for the patients in developing countries. Another example might be the mobile industry, specifically the producers and developers of telecommunications infrastructure. In this case however the companies have also their own motives to grant licences. For instance Nokia or Siemens, who both produced and developed infrastructure and mobilephones could have developed such a superior wireless technology that was only accessible with the company’s own phones. This would have lead to market distortions and huge inefficiencies. This is why compulsory licensing has been present to some extent also in the telecommunications industry and the level is also increasing (http://keionline.org/node/1663). My other case is governmental research organizations which also develop patents and then license them to everyone willing to buy the license, which mainly covers the cost of R&D. However if a company has been funding the research they might receive the first opportunity to license (others getting the license later) or even buy the patent. This latter practice should not happen, but I hear it does… The main aim of governmental research should be to increase the level of technology and increase the competitiveness of the industry. We have also discussed of the practice where governments or organizations buy patents, just to let everyone use it, increasing social welfare. This practice should also be used more widely in my opinion. Show less Reply Aneta Spychalska 19 November 2013 As mentioned in the text, there exist several positive economic effects in the market for technologies. Here some of them: higher diffusion of the technology, better allocation of resources in the economy, extension of product markets, etc. But these transactions remains small compare the total number of patents. In the US patents market only 10% of patents are subject to…Read moreAs mentioned in the text, there exist several positive economic effects in the market for technologies. Here some of them: higher diffusion of the technology, better allocation of resources in the economy, extension of product markets, etc. But these transactions remains small compare the total number of patents. In the US patents market only 10% of patents are subject to a market transaction at least once in their lives (Serrano, 2006 and 2008). Some actions can be done to encourage transactions and better serve the economy. In this rapport “Conseil d’analyse économique” wrote by Dominique Guellec, Thierry Madiès et Jean-Claude Pragerauthors authors mentioned some recommendations to better allocate the market for technologies: 1) Strengthen the legal status of intellectual property rights. 2) Create public funds Europe-wide patents with significant resources. They could be oriented to SMEs and their afford to have a better access to intellectual property. 3) Establish a policy standard valuation practices requiring transparency of the methods used. The procedure will be driving thereby: collecting information concerning transactions on intellectual property rights, setting standards of transparency for companies rating patents and the obligation to publish their evaluation methods and the development and publication of good practices in transactions property rights in line the standard under development by the German standards body (DIN). 4) Encourage experimental creation of an auction of patents and licenses. An active platform valuation of patents under the responsibility of a consortium of public and private research operators put in place, it would have meant to help research centers to raise awareness of skills in SMEs and to enable them to find more opportunities for their patents. 5) Preparing for the potential development of financial products sitting on patents. 6) Develop a competitive intermediate supply in the economy of knowledge. 7) Reorganize existing devices exploitation of public research. Replace multiple legacy disposififs by companies in order to provide one-stop and professional to researchers and businesses. It is therefore to simplify the current system. 8) Develop education and training of professionals intermediation in order to reduce the deficit of valuation experts lack in France. 9) Undertake coordinated analysis between DG Competition and national authorities concerned about the risk to harm competition. 10) Implement specific support measures for SMEs. 11) Use markets patents for societal. 12) Create a research institute patents on gathering the necessary expertise to the conduct of public policy. You can find more details on the websites mentioned bellow. http://www.ladocumentationfrancaise.fr/var/storage/rapports-publics/104000626/0000.pdf http://www.cae-eco.fr/IMG/pdf/CAE94_Resume_FR.pdf http://www.oecd.org/fr/sti/sci-tech/24510072.pdf Show less Reply Senterre Quentin 19 November 2013 According to the article, markets for technology are implicated in the diffusion of innovation and new technologies. It is a way for a company which needs a particular innovation to find it and benefit from a significant advantage against its competitors. However, when doing researches on the Internet, it is no easy to find a lot of examples of those…Read moreAccording to the article, markets for technology are implicated in the diffusion of innovation and new technologies. It is a way for a company which needs a particular innovation to find it and benefit from a significant advantage against its competitors. However, when doing researches on the Internet, it is no easy to find a lot of examples of those markets for technology. Only a few public authorities provide support in order to meet supply and demand. A public authority in the EU that can be found on the net is CORDIS: “the Community Research and Development Information Service. It is the European Commission’s primary public repository and portal to disseminate information on all EU-funded research projects and their results in the broadest sense”. Source: http://cordis.europa.eu/home_fr.html On the other hand, there are also private companies like: Innovation Québec: “Founded in 2012, Innovation Québec is a private firm specializing in economic and technological innovation research and consulting services. Innovation Québec provides a strategic watch and conducts case studies on innovations in private and public companies, both in developed and emerging countries.” Source: http://innovationquebec.com/ Both of those sites are innovative in the field of markets for technology improvement, but this is not enough. Markets for technology are still in the earliest stages of their development in many industries. In my opinion, the leading public authorities around the world must work together in order to improve the functioning of markets for technology through the share of information. Sites like CORDIS could be improved to give the same services provided by “Innovation Québec” (which is meeting supply and demand) but also be extended to a worldwide public network. This could be done using a social network interface like Linkedin for example in order to promote new technologies and to help companies to find the innovation they are looking for. According to me, a potential worldwide association of the leading public authorities would be an important step on the way to efficient markets for technology and innovation’s diffusion. Show less Reply Guillaume d'Oreye 19 November 2013 One thing that could improve the efficiency of markets for technology would be to fight the famous "patent trolls". Last year in the US 40% of all patent lawsuits were dued to patent trolls. Indeed, the business model of some companies, the patent trolls, is to buy patents and to make money with lawsuits in case a company is in infringement…Read moreOne thing that could improve the efficiency of markets for technology would be to fight the famous “patent trolls”. Last year in the US 40% of all patent lawsuits were dued to patent trolls. Indeed, the business model of some companies, the patent trolls, is to buy patents and to make money with lawsuits in case a company is in infringement with their intellectual property. And here comes the amazing fact that Apple and Google spent more money in 2010 on patent litigation than R&D. Companies spend too much money in lawsuits than they should. All that money wasted is not for R&D, job creation,.. and thus not beneficial for the society. The US government is now looking for a way to stop the patent trolls and i’m sure it will help the markets for technology if they are not present anymore. I think a good way to tackle this problem would be to oblige a company to produce and commercialise things which they have the patent for. Companies sell patents on the IP market to patents trolls because they give a good price for it. Patents trolls give a good price because they think another company will break the law and so make money with it. If you take the patent troll away 2 things will happen. Patent prices and money wasted in lawsuits will fall down and above all companies will less fear to sell a patent which will increase the confidence within this market and thus it will be more efficient. At the same time the spared money will be invested more wisely in the company at the benefit of the society. source: http://www.forbes.com/sites/edblack/2012/11/14/patent-wars-rage-as-tech-industry-waits-for-serious-reforms/ Show less Reply Duvivier Julien 19 November 2013 To develop a market for technologies two actors are needed: Buyers and sellers. The buyers are the companies who want to produce and sell the innovation to the final customers while the sellers would be companies only focusing on the research to find new technologies. However the buyers would buy a technology only if the transfer price is lower or…Read moreTo develop a market for technologies two actors are needed: Buyers and sellers. The buyers are the companies who want to produce and sell the innovation to the final customers while the sellers would be companies only focusing on the research to find new technologies. However the buyers would buy a technology only if the transfer price is lower or equal to the cost to develop this technology in his own R&D department. In fact, it’s the same as the company outsourced its R&D department. But as the buyers are currently more abundant on the market than the sellers, the prices for new patents are too high. Public authorities have to find ways to reduce this price and make it lower than the cost to do everything by oneself. Solutions to reduce the transfer price could be to make easier the transferable rights, reduce the cost for negotiating, writing licensing contracts or gives advantages to research companies like subsidies. Make the seller position more profitable to stimulate the creation of new research companies or improve the communications of universities about their new technologies. Nevertheless subsidies and fewer taxes are artificial ways to move the price of the market so the public authorities should only remove all legal obstacle to have the true price on the market. And if the true price on the market is still too high, markets for technologies aren’t maybe the solution we are looking for. Show less Reply Sylvain Choquet 19 November 2013 A quite recent case strikes my mind when talking about market for technologies. In 2012, Kodak has filed a bankruptcy demand in the united states in order to save the company. After almost one year under the bankruptcy protection, a judge has allowed Kodak to sell some of its patent in order to have liquidities and exit the bankruptcy protection. A lot of…Read moreA quite recent case strikes my mind when talking about market for technologies. In 2012, Kodak has filed a bankruptcy demand in the united states in order to save the company. After almost one year under the bankruptcy protection, a judge has allowed Kodak to sell some of its patent in order to have liquidities and exit the bankruptcy protection. A lot of 1000 patents has been sold to a partnership between google, apple, microsoft and others. While competitors, these firms have agreed to cooperate to buy the patents and such partnerships are quite common in patent sales because they can prevent patent infringement litigation. Such partnerships are, in my opinion, a good way to allow market for technologies to work well because it prevents a company to become too dominant on a certain market (in this case, it could have led to a dominant company in the field of images acquisition, particularly important for smartphones). By teaming up, these companies have all access to the patents and are still competitors, yet they still need to innovate in order to compete. These partnerships have a good effect on the market for technologies because it allows some companies to sell patents at a good price (because other bids on it) and prevent a monopoly situation on some patents, thus not harming the consumers. However, since major companies are partners in the bidding, price payed for a patent lot will not be very high since there will not be a lot of bidders for some lots. This system can thus only work for companies that are really in need of liquidities. http://www.bloomberg.com/news/2012-12-08/apple-joins-google-in-500-million-plus-bid-for-kodak-patents.html Show less Reply Oleg Nikolaiko 18 November 2013 The markets for technologies are very important for firms, and for innovation, they helps create new ideas and helps smaller firms to get the access to technology. Like the article says, there are certain numbers of barriers to the optimal market. If the costs of negotiating and writing licensing contracts make the trade of IP unprofitable the only solution is of…Read moreThe markets for technologies are very important for firms, and for innovation, they helps create new ideas and helps smaller firms to get the access to technology. Like the article says, there are certain numbers of barriers to the optimal market. If the costs of negotiating and writing licensing contracts make the trade of IP unprofitable the only solution is of course try to reduce these costs. But another difficulty is the complex structure of the different markets for technology, like stressed in the article “buyers and sellers usually have a hard time to find each other”. The solutions to that problem are numerous; first we have in each country (EU) an “Innovation Fair” or “Technology Fair” where firms present their technologies for which they are ready to sell a license, and others firms can also browse the available technologies and find what they want. But these fairs stay at a local/national level. In a recent (2011) EU Tender represented by the Institute of Technology Management, we can find some propositions to improve the functioning of such a market; for example reduce the fragmentation of the IPR markets, and tend to create a Global European IPR market with the same rules for every country (EU) that will increase the confidence of actors, facilitate the transactions and the circulation of the Intellectual Property with more information and the same valuation methods for the patents. source http://ec.europa.eu/enterprise/policies/innovation/files/creating-financial-market-for-ipr-in-europe_en.pdf Show less Reply Antonio Ouwerx José de Mello 18 November 2013 I would like to focus my comment on the existence of large costs of negotiating and writing licensing contracts and how, in some cases, it directly affects the profitability of technology/patents transfer. As we know, each party or organization is looking for its own interest; between these parties there are information asymmetries and finally that their time costs money. Thus,…Read moreI would like to focus my comment on the existence of large costs of negotiating and writing licensing contracts and how, in some cases, it directly affects the profitability of technology/patents transfer. As we know, each party or organization is looking for its own interest; between these parties there are information asymmetries and finally that their time costs money. Thus, it can be at some point very difficult for two different parties to reach an agreement or achieve a consensus for the technology transfer. It becomes even more difficult when the transfer concerns a larger number of actors. This is when I believe that the idea to create a framework could be a great solution to the problem. It actually would accelerates the process of technology transfer by helping the different parties to reach easily an agreement on the main points and giving a standard contract model that could be quickly adapted for each technology transfer situation. I found that in real life, UK has set a policy that exactly proposes this kind of solution; they called it: The Lambert Toolkit. It consist in a set of model agreements that were developed in the UK through negotiations between representatives from academia, government, large companies, and small companies. The main goal for creating this policy was to diminish the financial and time costs of negotiating IP agreements before starting a research collaboration or sponsored research arrangement. This means that in some situation the seller and buyer in the technology market come together even before the research has started or a technology discovered. The main reasons are the investments needed for the research are very high and the different parties should share the risk of these high investments. More precisely, this toolkit assists parties in allocating IP between them so as to clarify who is entitled to make use of which knowledge for which purposes. Prior to the development of this toolkit, actors found either their research delayed because parties failed to communicate and to identify and resolve contentious problems; or because critical issues were left unresolved, leading to later difficulties in their relationship. Recognition of these problems led to the development of a set of agreements from which parties could choose how to govern their arrangements. The model agreements are not mere models or frameworks but full legal agreements, guidance documents and a decision guide through which to select the most appropriate form of agreement. http://www.ipo.gov.uk/lambert http://www.ipo.gov.uk/ipresearch-lambert.pdf Paper “Collaborative Mechanisms for Intellectual Property Management in the Life Sciences” written by OECD Show less Reply Christophe Speth 17 November 2013 It is made clear in this post that there is a need to diminish transaction costs in order to ensure an efficient and well-functioning market for technologies. Transaction cost is a catch-all concept, and therefore it is valuable to distinguish between different kinds of transaction costs. Carl Dahlman is doing so in a seminal paper, "The Problem of Externality" (1979).…Read moreIt is made clear in this post that there is a need to diminish transaction costs in order to ensure an efficient and well-functioning market for technologies. Transaction cost is a catch-all concept, and therefore it is valuable to distinguish between different kinds of transaction costs. Carl Dahlman is doing so in a seminal paper, “The Problem of Externality” (1979). He first considers search costs, or the costs related to the search of a partner (patentee or licensee) to trade with. One major problem in the market for technologies, especially in the case of cumulative innovations, is that patentees are encouraged to ‘hold up’ new innovators. This in turn increases search costs as new innovators want to avoid being ‘hold up’. Dahlman then switches to bargaining costs. Negociating involves considerable costs, both administrative ones (writing down a contract) and strategic ones (in particular when there are a large number of parties involved in the process). Last, there are monitoring and enforcement costs that are incurred to ensure that parties comply with the terms of the agreement. In order to smooth the functioning of markets, decision-makers should therefore resort to policies that are deemed to decrease search, bargaining, and monitoring and enforcement costs. References Dahlman, Carl J. “The Problem of Externality.” Journal of Law and Economics 22.1 (1979): 141-162. Show less Reply Ricardo Pereira Gomes 17 November 2013 Markets for technologies are very important for the innovation. Nowadays firms have difficulties to make researches and apply this one. Create a place for entrepreneurs and innovators to find agreements on the use of the patent could improve the incentive to innovate. Indeed, some firms may have great ideas and possibilities to make innovation but this one should be useless…Read moreMarkets for technologies are very important for the innovation. Nowadays firms have difficulties to make researches and apply this one. Create a place for entrepreneurs and innovators to find agreements on the use of the patent could improve the incentive to innovate. Indeed, some firms may have great ideas and possibilities to make innovation but this one should be useless for him, thus they should sell it for another firms which really want this innovation. To create a market for technologies, they should make negotiations easier and reduce transaction cost. Recently, a new website has been created “Innovation Quebec” where firms could post specifics demands or offers for some technologies. their goal is to make a single platform where innovators and entrepreneur should find what they want. In the same way, we should create a place to make auction with the innovations. For example, when firms ask a patent they might have the possibilities to say that they want to sell his innovation, and governments should set a specific moment where they purpose the new innovations to entrepreneurs and the patent will be get by those who have the highest valuation. Show less Reply Marina Dinkova 17 November 2013 Althоugh that Lamоreaux and Sоkоlоff(1997 and 1998) have dосumented the рresenсe оf an aсtive market fоr teсhnоlоgy in the US during the late nineteenth and twentieth сenturies, markets fоr teсhnоlоgy seems tо be in the earliest stages оf develорment in many industries and faсe many institutiоnal оbstaсles and struсtural сhallenges. Trade in teсhnоlоgy is nоt sо advanсed as it shоuld be.…Read moreAlthоugh that Lamоreaux and Sоkоlоff(1997 and 1998) have dосumented the рresenсe оf an aсtive market fоr teсhnоlоgy in the US during the late nineteenth and twentieth сenturies, markets fоr teсhnоlоgy seems tо be in the earliest stages оf develорment in many industries and faсe many institutiоnal оbstaсles and struсtural сhallenges. Trade in teсhnоlоgy is nоt sо advanсed as it shоuld be. This рrосess сan be imрrоved thrоugh liсensing. The divisiоn оf labоr between develорment aсtivities and researсh is faсilitated by selling the R&D рrоjeсts thrоugh liсensing. The оverall effiсienсy оf the innоvative рrосess сan be imрrоved by this vertiсal sрeсializatiоn. Unfоrtunately, the liсensing instrument is underutilized by SMEs. Mоstly, this is beсause liсensоrs fear unсertainty regarding the рrоteсtiоn оf their intelleсtual рrорerty, inсluding trade seсrets. Оn the оther hand, оften the severe restriсtiоns that соme with liсense agreements, make liсensees reluсtant tо aссeрt it. These in turn are the result оf liсensоrs being оverсautiоus tо рrоteсt their interests. The viсiоus сirсle is соmрleted. A lоt оf wоrk has tо be dоne tо make the liсensing оf knоwhоw and trade seсrets mоre aссessible fоr thоse whо need it mоst. In the EU firms alsо faсe infоrmatiоn рrоblems. These suggest an imроrtant rоle fоr роliсy initiatives direсted at inсreasing transрarenсy оf markets fоr teсhnоlоgy thrоugh better рubliс reроrting оf IР transaсtiоns and their eсоnоmiс imрaсt. Aссоrding tо the exрerts “mоre extensive and regular соlleсtiоn оf data оn trade in teсhnоlоgy by gоvernment statistiсal agenсies wоuld be very welсоme.” The Register оf the Eurорean Рatent Оffiсe (EРО) соuld be seen as a key instrument tо рrоvide соmрanies with an easy aссess tо рatent infоrmatiоn, and tо enable market-driven intermediaries tо develор innоvative tооls fоr searсhing рatent databases, and thereby reduсe sсreening соsts. There is alsо laсk оf standardized соntraсts and market nоrms gоverning transaсtiоns. There are many оbstaсles in markets fоr teсhnоlоgies, sо роliсy makers shоuld рlay a key rоle in the imрrоvement оf сritiсal market infrastruсture, as imрlementing lоw соst, timely, and рrediсtable disрute resоlutiоn meсhanisms reduсing unсertainty abоut the sсорe, validity and enfоrсeability оf intelleсtual рrорerty. These соuld be aсhieved by refоrming the рatent law,better funding and management оf рatent оffiсes. http://ec.europa.eu/enterprise/policies/innovation/files/options-eu-instrument-patent-valorisation_en.pdf Show less Reply Valerio Serse 16 November 2013 To improve the functioning of markets for technology, governments should intervene to reduce information asymmetry and its deriving high transaction costs faced by the enterprises. The first thing that governments could do is to promote the exchange of knowledge between universities and industries. This has many positive aspects in a social welfare perspective, like for example improving competition among firms…Read moreTo improve the functioning of markets for technology, governments should intervene to reduce information asymmetry and its deriving high transaction costs faced by the enterprises. The first thing that governments could do is to promote the exchange of knowledge between universities and industries. This has many positive aspects in a social welfare perspective, like for example improving competition among firms that could have access to a new technology and commercialization of universities R&D results. To implement this transfer of knowledge, universities have specialized office in technology transfer activities that operate as a bridge to industries. In Europe, for example, was established by the Joint Research Centre a network of technology transfer offices (European TTO circle) with the aim to connect all the most important European public research institutions. The main advantage of this network is the sharing of expertize and best practices that can lead to a standardization of the technology transfer process, thus to a reduction in transaction costs. Another thing to do is improving the marketplace by promoting the creation of patents exchange platform. Governments could for example organize fairs where buyers and sellers meet together or create a computer networking where patents are sold. Creating an online market for patents could lead to a significant reduction in transaction costs because it would be possible for firms to access to many different patents information in an easier way. Is it true that some commercial platforms already exist but they are not very used by small firms mainly because of a lack in resources. So one thing that could be done is to make small firms aware of such platforms and to provide them some consultant service experts that could help them. Moreover, national patent register should collaborate with patent brokers to develop new effective tools for searching patents in the database, thus companies will face less screening costs. http://ec.europa.eu/dgs/jrc/index.cfm?id=6480 http://www.wipo.int/export/sites/www/freepublications/en/intproperty/928/wipo_pub_928.pdf http://ec.europa.eu/dgs/jrc/index.cfm?id=2880 Show less Reply Henrotte Philippe 16 November 2013 I will give an example of the Indian Pharmaceurical sector. In this case, such policies aren't implemented yet but as we can see, such policies SHOULD be implemented because there are some regulatory lapses that bring down this industry. In the past, the Pharmaceutical industries was very promising and was considered as a defensive play for investors. It was a low…Read moreI will give an example of the Indian Pharmaceurical sector. In this case, such policies aren’t implemented yet but as we can see, such policies SHOULD be implemented because there are some regulatory lapses that bring down this industry. In the past, the Pharmaceutical industries was very promising and was considered as a defensive play for investors. It was a low risk industrie thanks to the steady and inelastic demand. The defensiveness-which is the ability to generate constant returns and earnings irrespective of the overall sentiment of the stock market -of the sector was very good. But the sector has changed a lot this recent years, overseas expansion ha brought intense competition and disputes relating to violation of patents have increased the risk profile of the sector. Volatility of the sector has increased consitenly which is in oposition of the defensiveness of the sector. The Indian Pharmaceutical sector therfore needs policies that encourage patents trade and that punish the violation of other’s patents! Source: http://articles.economictimes.indiatimes.com/2013-05-25/news/39521492_1_caraco-pharma-sector-sun-pharma Show less Reply Suzanne Beguin 16 November 2013 I think this is important than public authorities give access to patent system information first and intervene in innovation market failure next. By market failure, we can think of the lack of information and the low quality access to the patent system (databases, procedures, stakeholders) that increases the search costs of a potential patent buyer. To fill the gap of…Read moreI think this is important than public authorities give access to patent system information first and intervene in innovation market failure next. By market failure, we can think of the lack of information and the low quality access to the patent system (databases, procedures, stakeholders) that increases the search costs of a potential patent buyer. To fill the gap of information in Europe, the EPO (European Patent Office) recommends the patent information centers (PATLIB) to get information on patenting process. The PATLIB centers are a network of patent information centers throughout Europe which provide information about patents by searching into national and international patent databases. Some centers offer training programs, workshops, patent awareness modules for their clients. A conference is organized each year where patents centers and clients are made aware and trained to new developments in patent information markets. Public interventions that can be made (and I found some proposed by the WIPO (World Intellectual Property Organization)) are to create patent intermediaries. Governments can hold patent fairs, where patent users can meet with patent holder. An e-market for patents can be also created. Japan made two applications of those ideas by launching a nationwide patent fair in 1997 and the Japan technomart website. Another intervention proposed is to encourage specific traders (patent brokers) to facilitate the patent trade. In fact, as patent often involve leading-edge technology, there can be to understand the product for some potential clients. Sources : http://www.epo.org/searching/patlib.html « Creating a patent market » chapter in Hisamitsu A., Intellectual Property Policies for the Twenty-First Century, 2000. http://www.wipo.int/freepublications/en/intproperty/834/ Show less Reply Mariame Ammour 16 November 2013 The European Commission have the objective to make the car industry stronger and more competitive by reducing the CO2 emissions. The European Union must maintain a world-class automotive industry, able to produce the most energy-efficient vehicles and the safest in the world, while providing highly skilled jobs for millions of people. Regarding R&D, to encourage the green results, the European Commission…Read moreThe European Commission have the objective to make the car industry stronger and more competitive by reducing the CO2 emissions. The European Union must maintain a world-class automotive industry, able to produce the most energy-efficient vehicles and the safest in the world, while providing highly skilled jobs for millions of people. Regarding R&D, to encourage the green results, the European Commission is working on common European patents (unitary patent: a standard patent for the EU that will be both simple and more affordable) and joint productions in the equipment or batteries in particular. There is no doubt that the loss of the automotive sector would be disastrous for Europe in terms of R&D because they represent an irreplaceable support in terms of innovation (new materials, nanotechnology, electric batteries …) and technological know-how / industrial. Another help was the financing. To allow a revival of the demand, the government gave bonuses for the least polluting cars hoping to promote electric cars. But it doesn’t really work. Also the EIB reserved loans for production cooperation, exemption from competition rules stating that the battery is of strategic interest. And thus, allowing auto makers to pool their costs to invent the future vehicles. To conclude, the automotive industry is facing new challenges. Between the crisis, regulations for CO2 emissions and sales in Europe which fall down, it should set new goals and evolve to keep its place in the European economy. The European Commission changes the landscape of the automotive industry by the regulations but to boost the industry in a long term view. Source : – http://ec.europa.eu/news/energy/110830_en.htm Show less Reply Saad Ahmad 16 November 2013 It is indeed true that the market for technology is plagued by many uncertainties and obstacles. Apart from the large costs involved in negotiating and writing licensing contracts and the fact that buyers and sellers have a hard time finding each other, licensing transactions fail to take place in most cases even when these problems are overcome. Absence of end…Read moreIt is indeed true that the market for technology is plagued by many uncertainties and obstacles. Apart from the large costs involved in negotiating and writing licensing contracts and the fact that buyers and sellers have a hard time finding each other, licensing transactions fail to take place in most cases even when these problems are overcome. Absence of end user demand, inability to reach mutually acceptable financial terms, inability to agree on scope of IP, regulatory issues and post contractual buyer’s remorse due to asymmetry in information are few other major issues. These problems can be categorized into two major subcategories – Those attributable for underutilized IPs (transactions fail to take place) and those resulting in market failure (true price for technology not realized). Public intervention to resolve such issues can take many forms and can target different aspects of the problem. Initiatives to address information asymmetry and high transaction costs could include web based exchanges and auctions. Governments could play a crucial role by supporting such initiatives. Better public reporting of IP transaction could be facilitated by regular collection and maintenance of transaction data by government agencies. Market failure due to non-realization of true prices could be further addressed by developing standards and norms governing IP transactions. This would facilitate valuation of IP assets and hence would increase the probability of realization of ‘fair value’ of the asset. Moreover, better regulatory infrastructure could help in reducing uncertainty about enforceability, scope and validity of IP rights. Show less Reply Bertrand RIbonnet 15 November 2013 In its paper called “Is the market for technology working? Obstacles to licensing inventions and way to reduce them”, I. Cockburn identifies two different types of costs that result in market failure. First, the “deals not done” that lead to an underutilization of IP. These would take place if the social welfare was increased with the transaction. We must thus…Read moreIn its paper called “Is the market for technology working? Obstacles to licensing inventions and way to reduce them”, I. Cockburn identifies two different types of costs that result in market failure. First, the “deals not done” that lead to an underutilization of IP. These would take place if the social welfare was increased with the transaction. We must thus find ways to lower the obstacles so that the transaction becomes socially profitable. The second type of cost is the wrong pricing problem for technology. As a consequence, resources may not be optimally allocated in such a market. The lack of information about prices and transactions were found to be the major causes for these costs. The paper highlights several means to reduce this asymmetry of information. First of all, the government should help and subsidize the specialist intermediaries between license holders and products developers. These would act as “IP marketplaces” that aim to facilitate the contact between both parties. Furthermore, the public sector should also work at increasing transparency on the market for technology. That would include the creation of “registries” in which you could find the name of the true owner of the patent. It thus requires the disclosure of this name. The goal is still to bridge license owners and users. Finally, creating standardized norms and procedures for the writing of contracts could also facilitate the transactions. Source: Cockburn, I., (2007), “Is the Market for Technology Working? Obstacles to Licensing Inventions, and Ways to Reduce Them”, Conference on Economics of Technology Policy Monte Verità June 2007 Show less Reply Hippolyte Dispa 15 November 2013 After doing some research, I came up with different public initiatives that aim at facilitating the link between potential buyers and actual patent holders. One of them caught my eye and this is the one I want to talk to you about today: the Enterprise Europe Network. It is a European organization which aims at providing support and help to…Read moreAfter doing some research, I came up with different public initiatives that aim at facilitating the link between potential buyers and actual patent holders. One of them caught my eye and this is the one I want to talk to you about today: the Enterprise Europe Network. It is a European organization which aims at providing support and help to small enterprises in their growth process. It is an essential instrument in EU’s strategy to boost growth and jobs as it can help growing enterprises move to the international, find EU funding, help them with IP laws, etc. It is precisely this last point that I want to present today. The Network can provide SMEs with information and advice on IP rights but also put them in touch with the right organizations and experts. It can act both as a counselor for SMEs trying to protect their IP but also for those that are trying to get in touch with the authorities in charge of the patent market. As the different success story present on the website demonstrates, it mostly helps small European enterprises protect their IP by providing assistance in the process of seeking patents. It is thus a public organization that can help private enterprises gain value through the transferability of patents. Another form of public intervention that directly came to my mind is patent buy-out. It simplifies the problem of transferability as it breaks the problem down to one transaction and it maximizes the returns from a social point of view. It does not diminish the incentives innovators have as their expected returns are quite the same but it introduces the problem of price evaluation for the public authorities. It is not an easy task to anticipate the flow of revenues a company might receive from a given innovation, and the risk to be turned down by innovative firms is real. However, when done right, patent buy-out improves the functioning of markets for technology as it makes the innovation available to all the enterprises out there. I believe there are quite a few public initiatives to enhance the functioning of market for technology and that the EEN is a great example. Patent buy-out remains an effective solution that must be used carefully. Indeed, although it provides every company with the same technology, it reduces the competitive advantage of the innovative firm on the final goods market and thus is not always an appropriate solution. Sources: http://een.ec.europa.eu/about/about Patent buy-out: a mechanism for encouraging innovation, Michael Kremer, NBER Working Paper n. 6304, December 1997 Show less Reply Alexis Winders 15 November 2013 An interesting article in Forbes (1) of the chief Patent counsel at IBM explains how IP market has been and is still getting more and more importance. He considers indeed IP like any other economic asset, which is now at the basis of a global market. Like any market, this needs to be regulated, more or less according to a…Read moreAn interesting article in Forbes (1) of the chief Patent counsel at IBM explains how IP market has been and is still getting more and more importance. He considers indeed IP like any other economic asset, which is now at the basis of a global market. Like any market, this needs to be regulated, more or less according to a country’s economic policy. In this article, the author explained what has been implemented in the US and what should be changed in other countries to foster the development of a global IP market. He gives the example of the American Invents Act enacted in September 2011. This Act would “improve the quality of patents by enabling third parties to submit information related to USPTO”. Still in the US, transparency should be an important field of improvement in the IP patent market. This will make all the process about patent application and patent process more transparent and clear for everyone. Consistency has also to be improved. There is a difference between the way US courts issue patent injunctions, reflecting the modern market conditions, what the US International Trade Commission does not do correctly. Harmonization is thus needed. The author also advocates for a global harmonization of the patent market and system. Collaboration among countries and firms in different countries would be welcomed to favor investment and the development of an efficient IP market. (1) http://www.forbes.com/sites/ciocentral/2012/04/18/the-emerging-global-market-for-intellectual-property/ Show less Reply Ruben Savelkoul 12 November 2013 My main concern with licensing agreements is the extent to which it is possible to grant exclusive licenses. Some firm that is trying to sell licenses for its inventions that it cannot profitably produce itself probably does not care for consumer welfare and may be inclined to grant an exclusive license to another firm if the price is right. Especially…Read moreMy main concern with licensing agreements is the extent to which it is possible to grant exclusive licenses. Some firm that is trying to sell licenses for its inventions that it cannot profitably produce itself probably does not care for consumer welfare and may be inclined to grant an exclusive license to another firm if the price is right. Especially if a firm is under pressure to sell its technology quickly to recoup the costs they made in the research process. If this happens, and one firm is granted exclusive rights to produce the inventions (even if it is just in one geographical area), a monopoly could be created while there may have been some other firms that would be prepared to produce the product under license. So it is possible that monopolies are created where there could have been multiple firms competing with the same technology and still be profitable. Because of this possibility, I feel that the government should monitor the licensing agreements in order to prevent the creation of monopolies in markets where firms could operate and be profitable with the same technology in the same market. Show less Reply Clarisse Werbrouck 12 November 2013 First of all, I would like to give my point of view on these markets for technology. I think this transferability is best for the society: we can find tons of examples where inventors were not able to launch their product on the market. I personally believe this is because inventors don't always have the required understanding of market diffusion.…Read moreFirst of all, I would like to give my point of view on these markets for technology. I think this transferability is best for the society: we can find tons of examples where inventors were not able to launch their product on the market. I personally believe this is because inventors don’t always have the required understanding of market diffusion. It is bit like them saying: “since I think my product is a good one, everybody will be interested and buy it”. However, it is often not the case: they have to really work on their initial invention and also be able to modify it to fit what the market really wants. Inventors are often reluctant to be flexible since they could consider that their invention is their “baby”. In other words, since inventors are not always able to manage well diffusion on the market, it is best to offer them the opportunity to sell it and thus secure a return on their R&D investments. This has of course positive consequences on the society as a whole. On the other hand, the markets for technology could be harmful to the society. In this article, Pluvia-Zuniga and Guellec say that it lowers the barriers to entry. I personally think this is not the case: indeed, if entrants don’t have the means to buy patents on these markets, they are confronted to higher barriers to entry. The only case in which these barriers are lower is when the entrant has the means to either buy a patent or invest in R&D internal research. In both cases, the entrants have to be able to cover such costs. Another problem with this is that big companies could buy patents they don’t want to exploit just to block the possible entrants in their market. If this happens and it is not controlled by governments, this could be highly harmful to the society: indeed, this would lead to more concentrated markets with big firms blocking the new entrants by buying “useless” patents. The markets for technology would thus be faced with problems such as abuses of dominant position. Governments have thus the responsibility to control that the purchases in these markets are not harmful to the society. As I said, what governments should definitely do is create control mechanisms like the ones used to detect, prevent and punish abuses of dominant position. These mechanisms would allow these markets to develop in a more legal and socially-oriented environment. Once these rules have been put in place, the reason for purchasing a patent will be to exploit it and not anymore to create a profitable competitive environment for big firms. These kind of initiatives from the governments will thus bring more potential customers on the markets for technology which is a way of developing these markets. Show less Reply Labye Stéphane 11 November 2013 Last year I worked as a student for the CWaPE (literally « Commission Wallonne pour l’Energie ») who is the regulator of the electricity market in Wallonia. I worked in the sector of renewable energy, which is a typical example of a sustained market. Actually, the European Commission has always supported this market, in order to develop and stimulate the consumption of…Read moreLast year I worked as a student for the CWaPE (literally « Commission Wallonne pour l’Energie ») who is the regulator of the electricity market in Wallonia. I worked in the sector of renewable energy, which is a typical example of a sustained market. Actually, the European Commission has always supported this market, in order to develop and stimulate the consumption of renewable energies all over Europe. This intervention was greeted with a lot of enthusiasm here in Wallonia. However, I would like to use this example to show that too much help does not always lead to an optimal solution. In fact, the enthusiasm was so high that the number of producers of renewable energy (i.e. consumers who decided to place solar panels on their roof) has increased from about 3000 at the end of 2008 to about 115000 in 2013. The reason is that the Walloon Government did not used in the right way the support that the European Commission offered to him. They have early too much rewarded particulars who builded solar panels. Consequently, we’ve had a few months ago (March 2013, to be more precise) a kind of crisis when the government had to change and to adapt its system of granting aid (the well-known green certificates). This crisis led to some citizen uprising such as http://www.touche-pas-a-mes-certificats-verts.be . Other specialists even thought that the government killed the market of solar panels. Another reason is basically the fact that the government has not taken into account the evolution of the technology (solar panels become more and more efficient). Furthermore, this phenomenon was not unique in Wallonia, other regions and other countries also suffered from this additional support. As a conclusion, I would say that it is always important that public authorities bring their help to stimulate markets of technologies. It is obvious. But please, be able to know the characteristics of the market you want to stimulate and be able to deal with it. http://europa.eu/rapid/press-release_IP-13-1021_fr.htm Show less Reply Shashank Rai Goel 10 November 2013 Being a student of finance, the first image that comes to my mind of a marketplace is a stock market. Loosely described, a stock market is an aggregation of buyers and sellers; a loose network of economic transactions of items that are largely intangible (commodity markets being the exception). As such, it is possible to set up exchanges where IP…Read moreBeing a student of finance, the first image that comes to my mind of a marketplace is a stock market. Loosely described, a stock market is an aggregation of buyers and sellers; a loose network of economic transactions of items that are largely intangible (commodity markets being the exception). As such, it is possible to set up exchanges where IP can be bought and sold. A quick search on the internet led me to the website of IPXI, an IP trading exchange head-quartered in Chicago (http://www.ipxi.com) The concept behind this exchange is interesting. The fundamental unit of trade is a ULR or a Unit License Right. This ULR effectively grants the purchaser a one-time right to use a particular technology in a single product. For eg. a new type of airbag sensor in a car. If a company wants to use the technology in 100,000 cars, it buys 100,000 ULRs at the market price. ULRs are also expected to be traded on secondary markets. This method of licensing IP has multiple advantages for both the buyer and the supplier. Firstly, it greatly reduces the transaction costs by providing a transparent and efficient marketplace. Secondly, it greatly facilitates non-discriminatory distribution of technology, so every buyer knows they are paying the same price as other buyers. Thirdly, the supplier does not have to worry about the pricing of the technology, since the price will be market determined. It also allows the supplier to monitor the adoption and reported use of a technology. However there is still the issue of monitoring the fair use of technology by the buyer. For eg. it is possible that the buyer purchases less ULRs but uses it to produce more products. Thus it would be important that such exchanges have a robust mechanism to monitor the use and expiry of ULRs. And as with any other stack market, the efficiency of the market will be determined by the number of buyers and sellers. So without a large no. of participants, the effectiveness of price determination may be bought into question. 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