Abstract
| Original language | English |
|---|---|
| Pages (from-to) | 403-416 |
| Journal | International Journal of Industrial Organization |
| Volume | 30 |
| Issue number | 5 |
| DOIs | |
| Publication status | Published - 2012 |
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Field-of-use restrictions in licensing agreements. / Schuett, F.
In: International Journal of Industrial Organization, Vol. 30, No. 5, 2012, p. 403-416.Research output: Contribution to journal › Article › Scientific › peer-review
TY - JOUR
T1 - Field-of-use restrictions in licensing agreements
AU - Schuett, F.
PY - 2012
Y1 - 2012
N2 - A widely used clause in license contracts – the field-of-use restriction (FOUR) – precludes licensees from operating outside of the technical field specified. When a technology has several distinct applications, FOUR allow the licensor to divide up his rights and attribute them to the lowest-cost producer in each field of use. This can improve production efficiency. With complex technologies, however, the boundaries of fields of use may be difficult to codify, entailing a risk of licensees' rights overlapping. We explore how this affects the optimal license contract in a moral hazard framework where the licensor's effort determines the probability of overlap. We show that depending on the contracting environment, the license agreement may include output restrictions and non‐linear royalty schemes.
AB - A widely used clause in license contracts – the field-of-use restriction (FOUR) – precludes licensees from operating outside of the technical field specified. When a technology has several distinct applications, FOUR allow the licensor to divide up his rights and attribute them to the lowest-cost producer in each field of use. This can improve production efficiency. With complex technologies, however, the boundaries of fields of use may be difficult to codify, entailing a risk of licensees' rights overlapping. We explore how this affects the optimal license contract in a moral hazard framework where the licensor's effort determines the probability of overlap. We show that depending on the contracting environment, the license agreement may include output restrictions and non‐linear royalty schemes.
U2 - 10.1016/j.ijindorg.2012.05.001
DO - 10.1016/j.ijindorg.2012.05.001
M3 - Article
VL - 30
SP - 403
EP - 416
JO - International Journal of Industrial Organization
JF - International Journal of Industrial Organization
SN - 0167-7187
IS - 5
ER -