Value capture does not always need to happen through IP

The classic non-IP way to capture value is a trade secret. Trade secrets only work if you can ensure that the idea remains secret. So trade secrets aren’t an option for research coming out of labs where people are incentivized to publish. It’s also an unstable equilibrium because someone else can patent it and then stop you from using your own thing. Trade secrets at the end of the day are another way to create a monopoly.

Mick Stadler writes a letter in 1976 on effective transfer mechanisms brings up another possibility that actually depends on as many as possible using a piece of research. If you issue a non-exclusive license or no license at all, the inventors can capture a lot of value by consulting with companies who are using the thing.

Why don’t people do more non-exclusive licensing? I could make up some reasons: the value from an exclusive license can be exponentially larger than a non-exclusive license with several licensees. It’s more work to create many deals around a non exclusive license than a single deal around an exclusive license. Companies want new technology to give themselves an edge over competition and a non-exclusive license doesn’t do that.

What other options are there?


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