The Evolution of Technology Markets: Separating Fact from Fiction

• Author: Intan Hamdan-Livramento
• Position: Economic Officer, Economics and Statistics Division, WIPO
• Pages: 20-23

p. 20 2012 | 2

THE EVOLUTION

OF TECHNOLOGY

MARKETS:

Separating Fact from Fiction

The emergence of ope n, more collaborative models of in novation has at-

tracted a great de al of discussion in recent years. O pen innovation – whereby

companies rely le ss on in-house research a nd development (R&D) and more

on external sourc es – is often held up as a major cha nge in the innovation

landscape. But what evidence is there to support this? This second article in

the IP Trends series takes a close r look at the data and reects o n the evolu-

tion of technology ma rkets and their role in encour aging more collaborative

and open innovation practices. The article draws on the ndings of the World

Intellectual Pr operty Repor t: The Changing Face of Innovat ion published in

November 2011.

MARKETS FOR TECHNOLOGY

Technology markets play a pivotal role in facilitatin g open innovation. They provide a

framework within which rm s can license in inventions that complement and en hance

their business objectives. They also make it possible for businesses to generate

revenue from licensing out th ose inventions they are not interested in developing

or commercializing.

Collaborative innovation fosters a cros s-fertilization of ideas and promotes follow-on

innovation. In the smartphone in dustry, companies source technologies from a ran ge

of hardware and software ma nufacturers to produce a wide offeri ng of consumer

products. Apple Inc., for example, complements its own know-how by licensing key

technologies from the likes of Q ualcomm Inc. and Samsung to make their attractive,

high-performance devices.

Companies are increasingly licensing their inventions to generate additional revenue.

Surveys indicate that one in ever y ve European companies, one in four Japanese

companies and one in seven U S companies license out their patented techn olo-

gies. When the number of co mpanies that would like to license out their invention s

is factored in, the share increases s ignicantly (see Figure 1).

In a few cases, licensing is the fo undation on which businesses are bui lt. U.S. company,

Qualcomm, for example, is in the busine ss of developing groundbreaking technolog ies

that are licensed to external so urces. These royalty-bearing lice nsing agreements

By Intan Hamdan-Livramento,

Economic Ocer

Economics and S tatistics Divi sion, WIPO