les Nouvelles - December 2008

Licenses As Critical Sources Of Innovation

Viktor Braun

Visiting Scholar at MIT, Sloan School of Management Attorney and Counselor at Law Currently, Düsseldorf, Germany

Technological innovation has been the principal reformer of our world. Nearly every aspect of our lives—from human interaction and transportation to economic processes, leisure activities or health care—has been dramatically reshaped over the centuries, with an especially rapid change in recent decades. Licenses, in their tremendous versatility, have been one of the most important instruments for the transfer and spread of novel technological developments, at least since the beginning of the U.S. Republic. It would therefore seem that technological progress and licenses are inherently linked. It is surprising, however, that this connection has largely been scrutinized from the one-sided perspective of commercializing technology. The legal and business literature has overwhelmingly focused its attention on the transfer of the legal right to use and market patented technology. It is mystifying, however, how in a world characterized by cumulative innovation licensees, the role of licenses in the essential question of where innovations come from and how they are generated has largely been ignored.

The aim of this set of three short articles is to rectify this oversight and emphasize the considerable role that licenses have played as sources of innovation. In this first article we will briefly cover the theory of what makes licenses suitable innovation generation instruments and use the example of Japan’s recovery from wartime destruction to visualize this extraordinary potential. In the second and third articles we will analyze the development of numerous other technologies which originated from licenses that revolutionized our lives: from the sewing machine or the photocopier to the steam engine, the CD or insulin.

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