Licensing and Business Models

License affects software companies’ business activities. While proprietary software vendors create custom licenses, open source companies have less flexibility. The Open Source Initiative (OSI) defines a list of 72 licenses as open source (“OSI approved”). For a project to follow open source licensing, it has to pick licenses from this set. Logically, we expect that an open source company defines its business model around the license that it selects. Thus, we can assume that business model decisions follow license choice. In our research we find that in some cases open source companies remove these license constraints for business reasons. We observed cases of open source companies moving from one OSI-approved license to another or companies innovating by adding additional terms. In all these cases, the decision of change is based on the license being a poor fit with their business goals. Not all open source companies are entitled to change the license because this option is available only to companies that own intellectual property. If they do not, they can try to reshape their business model, but that remains a suboptimal option. Whether cognizant of it or not, organizations are implicitly choosing a business model when they select a license. Therefore, it is very important to address licensing and business model decisions as one system instead of a disjointed two-step process. For this purpose we introduce (1) an evolutionary model where license selection and business model impact each other and (2) a taxonomy that addresses both licensing and business models. Our approach helps practitioners include revenue considerations in the licensing choice and researchers to more accurately study the antecedents and consequences of license choice.

Dual licensing in open source software markets

Dual licensing has proved to be a sustainable business model for various commercial software vendors employing open source strategies. In this paper we study the main characteristics of dual licensing and under which conditions it represents a profitable commercial strategy. We show that dual licensing is a form of versioning, whereby the software vendor uses the open source licensing terms in order to induce commercial customers to select the proprietary version of the software. Furthermore, we show that the software vendor prefers dual licensing to a fully proprietary strategy when the customers are very sensitive to the reciprocal terms of the open source license

The evolution of patent functions: New trends, main challenges and implications for firm strategy

Recent publications in the field of Intellectual Property (IP) have shown that the previous literature did not grasp how complex patents are. The goal of this paper is to present an overview of all identified functions of patents and of the main strategic implications of such a complex picture. We first survey the main patent functions : innovation protection, functions related to trade and finance, defensive roles, and patent as an input in the innovation process. We then define each function and analyse their main evolution trends in relation with the current environment. We finally identify the strategic implications of each function. We focus on the implications of the newly identified functions and on the interaction between the different functions.Patent ; Intellectual Property ; Strategic Management ; Functions ; Motives to patent

Intellectual Property Rights and Market Dynamics

Two opposite models are currently operating in the modern economy, the strong intellectual property rights (IPR) model, and the open source/open science model. They have traditionally been applied to alternative institutional contexts. The strong IPR model has been associated to the business environment, while the open science model has been associated to the academic or research system. More recently, a strengthening of the IPR system has occurred in the public research system, and open science models have been adopted in private sectors like the open source software. This paper discusses these different models and their implications on the innovative activity of firms and economies, and the market dynamics. One of the main benefits deriving from a strong IPR system is that it encourages the entry of new technology-based firms and the commercialisation of technologies in markets for technologies. At the same time, an increased patent protection is also associated to potential costs, such as those arising from a excessive fragmentation of property rights, an abuse of patent protection for strategic reasons (sleeping and blocking patents), and an increase in litigation costs.Intellectual Property Rights, Patents, Patent Policy, Open Science, Open Source Software, Technology Commercialisation and Diffusion

Experimentation with Strategy and the Evolution of Dynamic Capability in the Indian Pharmaceutical Sector

This paper demonstrates that radical regulatory changes can be tantamount to technological revolutions by studying Indian pharmaceutical firms. It shows that radical regulatory changes such as the Indian Patent Act of 1970, the New Industrial Policy of 1991 and the signing of TRIPS (Trade Related Intellectual Property Rights System) in 1995 served to open up new economic opportunities and constraints in the wake of which the winners and losers were selected as a function of the dynamic firm capabilities most appropriate for the new market environment.International Marketing, R&D Management, India, Pharmaceutical Sector, Corporate Strategy

Current policy issues in the governance of the European patent system

The European Parliament has been working towards building a discussion platform and a resource for further policy actions in the field of intellectual property rights. The Science and Technology Options Assessment Panel has set the goal of further enlarging the area of investigation in light of recent policy developments at the European level. In particular, the current study covers current policy issues in the governance of the European patent system, such as the backlog issue, the enhancement of patent awareness within the European Parliament, patent enforcement, the regional dimension of intellectual property in Europe, patents and standardisation, the use of existing patents, and patents and competition. These issues were discussed in the conference with stakeholders from European to national patent offices, from private to public sector actors. As a result of the conference, it was stated the need for an IP strategy for Europ

MusicNet & PressPlay: To Trust or Antitrust?

Efforts by leading record labels to fill the void they created by shutting down Napster led several to develop their own subscription online music service. The author of the following iBrief assesses the viability of those services in light of a Justice Department antitrust investigation into the practices of the labels in allegedly quashing smaller distributors and colluding to stifle competition, and considers the ramifications of an antitrust suit for both the major labels and their competitors

Heterogeneity in learning processes and the evolution of dynamic managerial capabilities as a response of emergence of biosimilar market: evidence from the Indian pharmaceutical industry

This paper examines heterogeneity in the response of Indian firms to the emergence of a new segment in the pharmaceutical generics market – biosimilars. The necessary diversity of the knowledge base and regulatory requirements underlying biosmilar products have created significant technological capability and market access challenges for Indian firms. This is but the latest development which adds to an existing catalogue of challenges including the decline of the traditional generics markets, regulatory hurdles in advanced country markets and failures in managing new drug development. Using case studies of three Indian firms we show that dynamic managerial capability is a key driver of heterogeneity in learning processes involved in acquisition of technological capabilities for biosimilars and market access strategies. It further highlights the important role of pre-existing capabilities in enabling and constraining the development of new biosimilar capabilities

Fuel on the Invention Funnel: Technology Licensing-in, Antecedents and Invention

In this paper, we examine the impact of technology licensing-in on firm invention performance. Studying a sample of 266 licensees and matched non-licensees using a two-part model specification, we find that licensees are more likely to introduce inventions than their non-licensee counterparts. This holds both if we consider invention in general, and invention in the licensed technological class only. We also show that familiarity with the licensed technology and technological specialization drives licensees to pursue a narrow invention strategy primarily focusing on the technological class specified in the license agreement.Licensing-in, Invention, Dynamic Capabilities, Learning Opportunities, Technological familiarity, Technological specialization