While some firms may be determined to secure intellectual property protections to gain the upper hand on their competitors, new findings from researchers at the University of Buffalo suggest that patent sharing may actually increase the odds of market success while spurring overall innovation.
According to visiting professor of economics Gilad Sorek, making previously patented inventions available to competing firms can help to simultaneously improve upon the product or service while raising the profits of the original breakthrough.
"In the scenarios I study, further innovation happens (through free-licensing) because a firm needs more research and development efforts to be taken by other innovators to stimulate the development of complementary technologies, or in order to encourage consumers stepping into a new market," Sorek explained.
By taking royalties out of the equation, the economist suggests that developers will look beyond profits and engage in truly independent research capable of delivering uncommon breakthroughs.
Such arrangements have been leveraged to great effect in the higher education community. In fact, World Intellectual Property Organization analysts recently confirmed that American universities are among the most active of all parties in the patent system.
Sorek contended that his theories can be applied in the business community as well and even cited several successful case studies centered in the highly competitive hardware and software markets.