Based On The Evolution Of Technical Ability Latecomers Patent Licensing Strategy Research

The latecomer firm (LCF) has some special features, such as with a late entrance tothe industry, lacking of resources initially, being possessed with initial competitiveadvantages, and focusing on catching up with the first-movers. Especially, the lateentrance to the industry results from the historical issues, not from the company itself.Lots of firms in developing countries are as to be the LCF, such as HUAWEI in China,and SAMSUNG in South Korea. Because of the technology gap, the LCF usually has topurchase technologies or access patent licenses from the first-mover firm before theyare qualified to manufacture and sell products in specific markets with the patenttechnologies. Therefore, patent license has become an important part of patentsoperation for first-mover firms. Besides, it is also an important mean for LCF to shortentechnology gap and strengthen technology learning.The definition of corporation patent licensing strategy is that the corporation takesa series of acts to maximize the self-interest. In terms of the status difference betweenlicensor and licensee, the corporation patent licensing strategy can be classified asfirst-mover firms’ patent licensing strategy and LCFs’ patent licensing strategy. Theformer literatures of patent licensing strategies are mainly based on the first-moverfirms. They usually assume that the first-mover firms have overwhelming bargainingability, so the LCF can only accept or reject the patent licensing contracts, which aredesigned by the first-mover firms. They rarely take the LCF as the studying object, ortake the bargaining ability of the LCF into account during the patent licensing process.However, practically, the patent licensing contract should permit the mutual willingness,and the LCF usually has part of bargaining ability.This paper studies patent licensing strategy from the perspective of a LCF by usingtheoretical deductive reasoning and case study, establishing Stackelberg models andCournot models. Compared with first-mover firm’s patent licensing strategy, a LCF’spatent licensing strategy considers the common factors, such as the market issue,information issue, legal issue, and technology issue etc. The cost advantage and the technological advantage of LCFs would have the influence on the bargaining abilityitself. Therefore, firstly, consider the cost advantage of the LCFs, and study the patentlicensing strategy of the LCF under the cost difference condition. We find that the costadvantage of the LCF will be able to motivate the first-mover firm to license patents.Secondly, consider the technological advantage of the LCF, and study the patentlicensing strategy of the LCF during the different technological capability developingstages. Our study indicates that:(1) The LCF should take the strategy of accepting orabandoning the patent license in the technological introduction stage;(2) The LCFshould take the imitating strategy and secondary developing in the technologicalimitation stage;(3) The LCF should take the strategy of cross-license and mutualbenefits in the technological innovation stage. In the end, we take the GRACE case as toverify the previous theoretical conclusions.