L30 Why to License Out Licensing out can be due to a wide range of reasons: To raise licensing revenue and make a direct contribution to company profits "Because technology is our franchise, aggressively protecting our technology and patents is critical to our ability to deliver long-term value to our stockholders" (J.J.Renier Chairman & CEO of Honeywell, 1992) To entrap licensees into followership and pre-empt attempts to design around IP This only works if the licensor can keep one step ahead of the pursuing licensees To extract value from technology which does not fit into core businesses This may involve non-core or merely obsolete technology Where the company does not have the resources to exploit the technology on it's own. This is important where the market is far larger than the company can exploit unaided. For example even Western Electric did not have the resources to exploit the full potential of the basic transistor patents. This is also a key justification for University TLOs (Technology Licensing Offices). As part of an entry strategy into overseas markets This only works if the licensor can keep control of the technology and confidential know how. Direct investment in manufacturing or a distributorship may be preferable (see L10). Where local regulations require local manufacture Local content regulations are one potential reason but there must also be good reasons for not making a direct investment in overseas manufacturing plant. In order to maintain a link with the technology that an early assignment would break The value of IP early in its life is difficult to assess. Licensing enables an option on future benefits to be retained in case the IP turns out to be of exceptional value To try to maximise adoption of the technology where standards/network effects exist In extreme cases it may even be worthwhile to virtually give away products to establish a standard. To enable access to other resources through cross licensing As part of establishing a strategic alliance To deflect an attack on a patent and convert the attacker into a defender This may be at the cost of a share in the profits from the technology but may be the optimum solution.